Globalism Localism at Work, Volume 13 (Research in the Sociology of Work) (Research in the Sociology of Work)

GLOBALISM/LOCALISM AT WORK

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RESEARCH IN THE SOCIOLOGY OF WORK Series Editor: Randy Hodson http://www.sociology.ohio-state.edu/work/ Recent Volumes: Volume 1:

Some Aspects of Working Class Consciousness in Present-Day Poland

Volume 2:

Peripheral Workers

Volume 3:

Unemployment

Volume 4:

High Tech Work

Volume 5:

The Meaning of Work

Volume 6:

The Globalization of Work

Volume 7:

Work and Family

Volume 8:

Deviance in the Workplace

Volume 9:

Marginal Employment

Volume 10:

Transformation of Work

Volume 11:

Labor Revitalization: Global Perspectives and New Initiatives

Volume 12:

The Sociology of Job Training

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RESEARCH IN THE SOCIOLOGY OF WORK VOLUME 13

GLOBALISM/LOCALISM AT WORK EDITED BY

LENI BEUKEMA Department of Interdisciplinary Social Sciences, Utrecht University, The Netherlands

JORGE CARRILLO Department of Social Studies, El Colegio de la Frontera Norte, Mexico

2004

Amsterdam – Boston – Heidelberg – London – New York – Oxford Paris – San Diego – San Francisco – Singapore – Sydney – Tokyo

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CONTENTS LIST OF CONTRIBUTORS

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INTRODUCTION HANDLING GLOBAL DEVELOPMENTS, SHAPING LOCAL PRACTICES: THE INTERFERENCE OF THE GLOBAL AND THE LOCAL IN WORK RESTRUCTURING Leni Beukema and Jorge Carrillo

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GLOBAL INDUSTRIES, RESTRUCTURING AND LOCAL JOBS NEW FORMS OF INDUSTRIAL ORGANIZATION, REGIONAL DEVELOPMENT AND THE IMPACT ON WORK RESTRUCTURING IN BRAZIL Jos´e Ricardo Ramalho

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MAIN LABOR CHANGES IN FRENCH CAR INDUSTRY Jean-Pierre Durand

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SEGMENTATION OF SKILLS IN THE MEXICAN NORTHERN BORDER: CHALLENGES IN A GLOBALIZED REGION Alfredo Hualde

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PRIVATIZATION AND DEREGULATION OF TELECOMMUNICATIONS IN BRAZIL: THE GLOBAL INFLUENCE AND LOCAL IMPLICATIONS Sonia Guimarães Larangeira

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FOREIGN DIRECT INVESTMENT AND LOCAL LINKAGES: THE CASE OF THE MEXICAN TELEVISION INDUSTRY IN TIJUANA Jorge Carrillo

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EFFECTS OF THE GLOBALIZATION ON THE WORKERS OF ´ THE ELECTRONICS CLUSTER IN JALISCO, MEXICO Raquel Edith Partida Rocha

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INDUSTRIES AND SERVICES. GLOBAL NETWORKS AND CHAINS NEW DEALS IN GAMBLING: GLOBAL MARKETS AND LOCAL REGIMES OF REGULATION Terry Austrin and Jackie West

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GLOBAL LOGISTIC CHAINS AS A RESULT OF LOCAL PROCESSES: THE CASE OF ORCHIDS Leni Beukema and Harry Coenen

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TAKING A SEAT IN THE GLOBAL MARKETPLACE: OPPORTUNITIES FOR “HIGH ROAD” UPGRADING IN THE INDONESIAN WOOD FURNITURE SECTOR? Anne Caroline Posthuma

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CONCLUSION WORK RESTRUCTURING AS ONGOING GLOCAL PROCESSES: CONCLUDING REMARKS Leni Beukema

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LIST OF CONTRIBUTORS Terry Austrin

Department of Sociology, University of Canterbury, New Zealand

Leni Beukema

Department of Interdisciplinary Social Sciences, Utrecht University, The Netherlands

Jorge Carrillo

Department of Social Studies, El Colegio de la Frontera Norte, Tijuana, Mexico

Harry Coenen

Department of Interdisciplinary Social Sciences, Utrecht University, The Netherlands

Jean-Pierre Durand

Centre Pierre Naville, University of Paris-Evry, France

Sonia Guimar˜aes Larangeira

Department of Sociology, Federal University of Rio Grande do Sul, Brazil

Alfredo Hualde

Departamento de Estudios Sociales, El Colegio de la Frontera Norte, Tijuana, Mexico

Anne Caroline Posthuma

International Labour Office, Geneva

Jos´e Ricardo Ramalho

Department of Sociology, Federal University of Rio de Janeiro, Brazil

Raquel Edith Partida Rocha

Division of Studies of State and Society, Department of Social-Urban Studies, University of Guadalajara

Jackie West

Department of Sociology, University of Bristol, UK

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INTRODUCTION

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HANDLING GLOBAL DEVELOPMENTS, SHAPING LOCAL PRACTICES: THE INTERFERENCE OF THE GLOBAL AND THE LOCAL IN WORK RESTRUCTURING Leni Beukema and Jorge Carrillo ABSTRACT In this introduction restructuring of work is presented as an ongoing, locally situated process in which actors within work organizations play an important role. Central themes of this process are the increasing importance of the cultural within the economical sphere, the different organizational options of organizations, new tensions in labor relations and the local consequences of continuous spatial relocation of labor. Before introducing the different contributions to the volume, attention is paid to methodological implications for research on the increasing interrelations of the global and local within processes of work restructuring.

INTRODUCTION1 Keeping on track with the demands of the times and of consumers, customers and clients means different things for work organizations in the Netherlands as Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 3–20 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13001-X

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compared to work organizations in Mexico, or to any country for that matter. Consequently, the processes of work restructuring that continuously are taking place to keep on track will take on different forms in different contexts. In this general introduction to the central theme of this book, we will first of all point out our view on the restructuring of work, which goes beyond a mere conceptualization of it as the reorganization of formal work structures, functional hierarchies and qualification systems. We depict the restructuring of work as an ongoing, locally situated process in which actors within work organizations play an important role. As illustrated in the case studies presented in the varying chapters, the way actors give shape to their everyday work practices shows an enormous diversity in different local situations. But when taking the context of work organizations into account, the increasing importance of the global on the local processes is obvious. More and more, global developments like technological innovations that dissolve traditional boundaries between organizations, countries or even continents, and production concepts and logistics that take no notice of such boundaries, are influencing work processes in local situations. In this sense, we could say that organizations almost everywhere in the world are confronted with the same developments. And still, the effects of these global developments work out differently in every specific local context. After having defined our understanding of what the restructuring of work implies, we will briefly introduce some of the central themes in the discussion about the global and local implications of restructuring processes in work organizations. First we discuss the increasing importance of the cultural aspect within the economic sphere, indicating the necessity of the incorporation of a reflexive element in the approach of this complex research matter. We then consider the relevance of the organizational options open to corporations to enhance their strategic goals – varying from local, regional, national to international levels of organization – and examine the mediating role of intra- and interfirm relations between the global and the local. After briefly pointing to the threats that global and local processes of restructuring of work bring with them, we also focus on the new tensions in labor relations that come along with it. Another, related significant theme that in our view needs to be further investigated is geographical relocation, particularly the tension that exists between “clusterization” (by which we mean the regional location of firms and jobs and its economical, social and cultural consequences) and the relocation of labor toward areas of low wages. Moreover, we think it appropriate to expand the study of the global and local implications of processes of work restructuring from the industrial sector to the service sector, as well as to the domains where “fusion” of the two sectors takes place, as happens for instance in the “indistribution” sector.

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In the last paragraph of this introduction, we will pay attention to the methodological implications for research on the increasing interrelations of the global and the local within processes of work restructuring. While local practices evidently remain of central importance, the global doesn’t function only as a context for the local anymore. More and more, it forms a practice of itself in which an increasing number of actors play their part: as we can see on the world wide web, people and firms are both emitters and receptors and act on the local and global level at the same time. Therefore, we propose a reflexive approach to the study of work restructuring, in which the traditional dichotomy between the global and local is overcome and in which the way actors subjectively shape their interactions in work situations is explicitly taken into consideration. Within such an approach, the study of local contexts forms the central starting point for international comparative research.

RESTRUCTURING OF WORK AS AN ONGOING, LOCALLY SITUATED PROCESS Restructuring of work is regarded in this book from a multi-level perspective. As a general background, we analyse work as taking place in organizations where actors constantly interact and in those interactions (re) produce the structure of the work. This is to say that; on the one hand, people reproduce in their interactions existing structures in terms of the content and meaning of the work, the power relations and the norms and values that are related to the work. On the other hand, it is in these interactions, and only in these interactions, that it is possible to change the structures and produce new meanings, power relations and values. In short, these interactions form the organizational level, in which structures are both precondition and result of actions of the different actors with their individual and shared perspectives. Weick (1995) helps us to get an understanding of the processes via which the restructuring of work takes place by analysing the concept of sense making as grounded in both individual and social activity. As such, the individual and social activities form the groundwork of each organization in which work is structured and restructured. In our opinion, it is important to emphasize that this sense making is not taking place in a free or neutral space. On the contrary, how people come to make sense of things is strongly connected to power relations. Power relations, however, are not simply imposed on actors but are equally the result of the routine performances of those actors themselves. What room for action they have and which strategies they are able to employ, depends to a considerable degree on

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their access to resources. The resources and (social, cultural, financial) capital actors have at their disposal determine the position that individuals or groups have in the work field (Bourdieu & Wacquant, 1992). Therefore, the power relations and the resources that actors can appeal to be indispensable features to get an understanding of the processes of restructuring of work and should thoroughly be taken into account when researching the restructuring of work. These starting points of our analyses have important implications for the study of the restructuring of work. The first implication is that the local, research on location, always has to be part of the analysis in order to understand not only the restructuring of work itself, but also the way in which these changes take place and the reason why the restructuring happens as it does. The second implication is related to the processes of change that are involved in the study of the restructuring of work. It concerns the fact that social structures, and this applies to meaning and power structures as well as to normative frameworks, typically have a rather persistent character (Tromp, 2001, p. 53). By using existing normative and interpretative frameworks and power relations, social actors help to reinforce and reproduce these structures time and again. Especially action patterns that are anchored in institutionalized forms like legal or governmental policies, prescriptions and hierarchies are firmly rooted in, and have a considerable influence on the everyday practices of social actors. In this sense, social structures depict “solidified” action patterns that are not easily changed. In practice, it is a laborious and toilsome task to break open the habitual routines that social actors repeatedly perform and consequently experience as “natural.” Moreover, social structures appear to be quite difficult to “manage;” with a few modified action patterns here and there one does not necessarily produce social change. To effectuate real social changes, one needs to initiate a process in which changes are implemented step by step, by way of long-term and broadly oriented input into the action patterns of the different players in the particular practice. The approach we propose for the research on the restructuring of work implies the recognition that restructuring of work is taking place everyday, in the normal activities of the people in the organization. In their actions people constantly reproduce the existing situation, but also try to modify it according to their possibilities and interests (see for instance the clarifying studies of authors like Burawoy, 1985; Delbridge, 1998; Miller & Slater, 2000). Since the existing structures within the organizations are rather persistent, shifts in the meanings, norms and values, and power relations will only gradually evolve and can not be simple be enforced to the actors from “above” (e.g. by management), or from “outside” (e.g. by government rules). Nevertheless the world of work is facing considerable changes from “outside,” resulting from developments as ICT and market demands like increasing flexibility of work and organization. Multi- and transnational companies are functioning on

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a world market, local management in many organizations respond to new global market conditions by introducing new production concepts, thereby changing internal labor markets. In view of these general tendencies, the attention should be focused at the way in which these lines of development are implemented in different contexts. Here the relation of general principles to concrete practices, of a universalistic to a particularistic approach in social sciences is at stake.

Global and Local The question raised above is a general one in social science but gains importance with the ongoing globalization: will there be one best way of organizing, will a universalistic, world wide economy and culture evolve, as Ritzer (2000) has expressed evocatively with the term McDonaldization? Or will actors in local practices handle global influences differently, depending on the concrete context (see e.g. Beck, 2000; Featherstone et al., 1995; Robertson, 1992)? In order to take position in this debate we first of all want to analyse dominant tendencies in the process of globalization. Globalization can be defined according to Giddens as the “intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa.” (Giddens, 1990, p. 64) The increase of world wide dependencies finds an important motor in ICT. Circulation of information and knowledge is not only facilitated but also directed by Internet: the success of actors is becoming more and more dependent of knowledge of and skills to handle new technologies. As Castells (1996) has made clear quite convincingly, the introduction of new technologies, the use of it and the application in different fields succeed each other in rapid pace. Actors who use this technology are becoming also co-developers: technological products are more often tailor made, experiences of users are used in technological innovations and actors have access to “make-it-yourself” products with which they can change the technology in use and in time etc. The empowerment of users leads to a change of power relations in the production of innovative technologies: “Users and doers may become the same” (Castells, 1996, p. 31). Take, for example, the fact that nowadays one can link up a spreadsheet with relevant databases, for instance a corporate data source or the files of colleagues, so as to automatically update the figures, without having to manually feed the new data (Economist, 2002, p. 6). On the other hand, ICT deepens the gap between empowered and “depowered” actors and regions. Regions, which are falling out of the global process, threaten to become passive players in the World Wide Web and world modifying networks. They stay behind in generating important flows of information, communication

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and capital (cf. Appadurai, 2001, p. 2). This doesn’t only account for regions like Africa and others in industrialized advanced countries and less and emergent industrial countries, but areas within regions that are part of world wide networks can also become excluded (Friedman, 1995; Lash & Urry, 1994). Globalization is in this way an asymmetric process; regions within networks are just as well in danger to fall out as regions outside of it. Beck’s analysis of the risk society (1992) is in line with this asymmetric production and distribution of information, wealth and power. Over the years, he has emphasized that globalization cannot be solely looked upon as an economic and cultural process, and that at least the ecological consequences of industrial societies have to be taken into account as well (for an overview, see Beck, 2000). He has pointed out that global processes are not only the result of deliberate human action, for these actions can have far reaching unintended consequences that mostly take place “behind people’s backs,” as it were, and are mostly denied or “repressed” threats (ibid., p. 39). Ecological destruction and technological-industrial dangers are global threats, caused by affluence on the one hand (e.g. the exorbitant use of energy in the western countries places a high pressure on the need to supplement natural energy sources with risk carrying nuclear energy) and by poverty on the other (e.g. in order to survive, people will sacrifice precious natural sources, like wood from the rainforests, to obtain economic goods).2 Because of their global character, ecological and technological-industrial threats often involve poor and rich people alike (e.g. an accident in a nuclear plant will effect a whole nation, or even several nations). The more fortunate people or countries have better positions and more possibilities to protect themselves against such dangers and to let them pass by, though (e.g. by avoiding living or working around industrial zones, by dumping nuclear waste in other, far away countries). All in all, the process of globalization as it occurs in our time will even increase the division between wealth and poverty. Both within and between countries the gap between rich and poor will become bigger as a result of the shifting of less profitable economic activities to low wages regions or countries, thus enabling the higher wages regions and countries to gain even more money. Globalization thus seems to be a process that influences the actions of most of the world population, not only in an economic sense but also in a cultural and social sense. It is a process that can’t be underestimated and is driven by powerful forces in the way it effects economic, cultural and social processes. Nevertheless, the debate can also be viewed from another perspective, the foundation of which lies in the assumption, outlined above, that structures are being (re) produced and are given shape in the actions of people. According to this assumption globalization is not only something that just happens to us, something “out there.” Actors have an active part in the process of globalization; it is also a process “in here.” Robertson

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(1992) has introduced the term “glocalization” to make clear that global processes are always embedded in local practices. Robins (in: DuGay, 1997a, p. 28) is using the term “global-local nexus” to refer to the process in which the global influences our local practices but in which also “re-localization” takes place, referring to the fact that global developments have a varying impact and are worked out differently in different social contexts. Old habits and routines are becoming transformed because of the awareness that there are many alternatives of doing things. In this sense the question is not how the global (re) shapes the local but how local actors handle global processes and (un)intentionally shape their local practices in a new way and by doing so help building (new) global processes.

CENTRAL THEMES IN THE STUDY OF WORK RESTRUCTURING AGAINST THE BACKGROUND OF GLOCALIZATION Translated to the processes of work in organizations the central question for research is: in which way is the global produced and reproduced in the local and what does this mean for the (re) structuring of the local? We will highlight some of the principal themes that can be derived from this question, themes that in our opinion are essential for a thorough understanding of the research field concerning the restructuring of work. Because of their central importance, they are necessarily formulated on a general level.

The Increasing Impact of the Cultural on the Economic As a first theme we want to point to the fact that, in a knowledge and information driven world society, the importance of meaning, of the cultural in the economic sphere increases. The dichotomy of actors vs. system is no longer adequate for understanding current processes in general, and certainly not for when processes within the world of work are concerned. Some authors are actively searching for concepts that transcend this dichotomy. Lash and Urry (1994, p. 60 ff.) introduced the concept of reflexive accumulation to create a clear focus on the way in which the cultural and economic sphere becomes more interwoven (on this last point, see also Ching, 2001). The concept incorporates a response to new, more global market conditions and emphasizes the increasing importance of knowledge and information for design and production of competitive products and services. Reflexivity refers not only to information-processing but also to symbol-processing activities and it comprizes not only production but also reflexive consumption.

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Moreover, in our opinion it is clear that while migration has gained importance as a result of increasing mobility, the culturing effects on the internal affairs in organizations consequently are increasing. For the internal organization – and as such for the restructuring of work – it requires that organizations and the actors within it handle this cultural diversity. That is to say, they have to acknowledge, accommodate to and account for the effects of cultural pluralism, confronted as they are with a truly rich proliferation of individual backgrounds, experiences and aspirations.

The Strategic Effects of Various Organizational Options Another theme that is of considerable interest in the research on work restructuring concerns the structural consequences of the increase in organizational options due to the process of globalization (Nederveen Pieterse, 1995, p. 50). Nederveen Pieterse distinguishes the following levels: transnational, international, macroregional, national, micro-regional, municipal and local. Although he relates these levels to administration-related issues, we think them equally important for analysing corporation strategies concerning the flow of goods, services and finance over the world. Here the activities of transnational and multinational organizations are at stake, but also the study of commodity and logistic chains that link policies of different companies over the world (cf. e.g. Gereffi, 1994; Ruigrok & van Tulder, 1995). It is important to see what kind of strategic choices these companies formulate and how they come to make these choices. For instance, which conditions are thought to be the most adequate for a global approach and when do companies think differentiation of branches for different regions in the world is relevant? In their analysis of the Sony Walkman, DuGay and others show how the company defines a global market and presents itself as a global corporation, but uses the local in that strategy: “First, the company aimed to operate in ‘all’ markets across the world, to reach as many potential consumers as possible. Second, the company aimed to reorganize processes of production in such a way so that they would not be limited by constraints of the nation-state. To pursue these aims Sony moved manufacturing and marketing operations to different locations in the world and setting up ‘local’ operations in various countries”(DuGay et al., 1997b, p. 79). Motives for this strategy were of a financial character (reduce labor costs and use local rules and regulations as suited) and technological character (adapt to local conditions). Gereffi (1994) shows convincingly that constant outsourcing and networking leads to an increasing gap between rich and poor, on a global but also on a local scale. What we see is that in the actual production of a good there is a profit margin of about 10%, whereas in the further trade and services related

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to the sales of the product, up till 50% of profit margin is realized. For OECD countries (Dolvik, 2001), as well as for other “developed” countries, growing dominance of the service sector (and as a consequence service employment) in their economy leads to new terms as “servicing of society.” On the one hand, this relates to the importance of customer orientation in organizing work. On the other hand, it indicates shifting power balances between production and distribution corporations (Beukema & Coenen, 1999). In the next section, it will be become clear how such shifting power balances between the power of production and power of logistics should be envisaged.

The Coming into Being of New Sectors Up till now, studies of the restructuring of work and its global and local implications have long focused on the industrial sector. However, these processes can be linked with corresponding processes in logistics and in the service sector in general (Wood, 1987). Since strategic decisions concerning different organizational options (as these are constantly made in a globalize world, carrying with them global and local implications) encompass these different sectors, the strong division that has always existed between them has come under debate. The coming into being of “industribution” as a mix of industry and distribution is a clear example of the diffusion of the boundaries between the sectors. In the era of increasing information and communication developments, clusterization and the development of commodity chains are closely linked to developments in logistic chains, in financial flows and in new forms of customer related activities. We already mentioned that the profit margin in the trade and services is usually much higher than in the actual production of a good. So we can see here, that the increasing importance of services leads to a shift in the power balance between production and distribution/logistics. Creating a picture and comprehending the consequences of these developments for work processes and for the division of (different kinds of) labor on a global and local scale, is of great importance. As such it should be one of the main currents in research field of the sociology of work.

Labor Relations in a Globalizing World When it comes to labor relations, which also forms a very important theme in the study of the global and local implications of work restructuring, different levels are concerned, as Nederveen Pieterse rightfully points out (national, transnational etc., see above). Correspondingly, the research will also have to focus at the different

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actors interacting on these fields (individual workers and local management, unions, nation states, federations of national states, strategic management of multiand transnational corporations etc.). As such labor relations cannot be seen apart from the themes mentioned above, they are inherently part of it. Nevertheless, it is important to investigate these relations separately, to be able to get more grip on the power structures and resources that are at stake in processes of work restructuring. Familiar topics in the social study of work, in which local and global developments are clearly connected, are the flexibilization of work and organization, the segmentation between core and periphery of workers (including the gender character of this segmentation) and the internal differences and similarities of these different kinds of workers. The role of particular unions in protesting against or of other unions (unintentionally?) supporting this tendency towards an increasing segmentation has been part of most of these studies. Recently Cornfield and McCommon has published an interesting volume on the question of “Labor Revitalization,” in which new initiatives of collective practices of workers are placed in a global perspective (Cornfield & McCammon, 2003). Less attention has been paid to the informal work that has evolved as a consequence of socioeconomic developments, especially in the Western countries. A last topic we want to mention in this context is the relationship between workers and their representatives, and strategic management of corporations. A relationship that has always been asymmetric as (unequal) power resources are involved in it. But that relationship is becoming more and more asymmetric as a consequence of the growing internationalization of (the field of) corporations and the difficulties of unions to acquire some power and play a role of importance, transcending national boundaries. With regard to both the study of trans- and multinational corporations and commodity and logistic chains, this seems to be one of the main future topics when it comes to empowerment of workers.

The Tension Between Clusterization and Relocation of Labor A complex topic that needs to be considered within the context of the ongoing globalization processes is the tension between “clusterization” and relocation toward areas of low wages and its impact on labor. In industrial terms two main tendencies of geographical relocation can be discerned, which are intimately related with the globalization process and with the social construction of geographical concentration through vertical or quasi-vertical integration, as laid down in systems such as “Just-in-Time” or synchronicity among Research & Development and manufacture. The term clusterization refers to the process in

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which companies in related production sectors cluster together to form firmly established industries (Boyer & Freyssenet, 2002). On the one hand, such processes have generally gone hand in hand with “job enrichment” and the development of activities requiring more skills from the workers. We have seen this development in traditional and modern industries, in capital-intensive sectors or in labor-intensive ones, and in industries with different levels of technology and knowledge. From mining, to the manufacturing of vehicles and electronics, and to the shoes and the apparel industries, this process of “clusterization” of activities is apparent. In this process, companies not only cluster together, but during this process more and more asymmetric relationships are formed, based on power relations. At the same time, competition is taking place between industrially advanced countries (the European Community, North America, Japan, the Asian tigers) and recent industrialized countries (such as Brazil, Mexico, India, Poland). On the other hand, the familiar process of geographical de-concentration towards low wages areas, with abundant labor force and favourable government regulation to the foreign direct investment, still goes on. More than forty years ago this process became known as “the new international division of labor,” where intensive labor productive processes were transferred from developed countries to “export processing zones” in Third World countries (Frobel et al., 1980). The regions which have become highly developed by this export industrialization model – Hong Kong, Taiwan, Mexico and Central America – have evolved to different degrees towards regions where higher value added activities are employed. Nowadays the Latin American countries feel strongly threatened in their evolutionary trajectory because of the strong competition of countries such as India and especially China. The more intensive labor sectors such as the manufacturing of toys, footwear and apparel have begun their relocation toward these countries. In consumer electronics and auto parts, a tendency toward the movement of capital has developed. This process of relocation leads to the reduction of wages and is strongly based on the intensification of labor (e.g. deploying cheap human labor instead of using more high technology). In this sense, globalization is not devoid of traditional processes of cost reduction via low road trajectory, nor of the local loss of competitive advantages. The constitution of managerial, technological and labor capacities at a regional level is not enough to repress the danger of the loss of competitive advantages of strong industrialization exporter’s regions – as we see happen in Mexico for instance. In short, globalization and regionalization are related with other processes such as “clusterization” and “global commodity chains” (Gereffi, 1994), relations that need to be studied more thoroughly to get a fuller understanding of the aspects implied.

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A thorough study of these developments cannot be done by individual social scientists from a single region. What is needed, is a network of researchers who take the study of work in their regional situation as a starting point and who combine their data in order to get more grip on the local and global processes that are taking place. In the last section of this introduction, we will elaborate on the question of how in future research such a reflexive and comparative approach in the research field of work restructuring could be given shape.

Towards a Reflexive Approach in Research on the Restructuring of Work What is needed when we want to study the global and local aspects of work restructuring is an approach that first and foremost offers the possibility to examine the simultaneity and interpenetration of the phenomena. That is to say, an approach which can shed light on how work is restructured against the background of global developments which are locally implemented and find their own specific forms in the different concrete situations that are influenced by them. In line with this need and the plea of Lash and Urry mentioned above, Valkenburg and Lind (2002) propose a reflexive approach in which the classical dichotomies of social science are overcome. The complex relationship between the global and the local and the implications thereof for the restructuring of work cannot be covered by simple, oneway causal relationships between independent and dependent variables. Within this complex relationship, the actor cannot be set against structure, nor can the global be set against the local, the universal against the specific, or objectivity against subjectivity (cf. Ching, 2001, p. 282; Sassen & Ching, 2001, pp. 261, 276). Moreover, the reflexive approach that is needed will have to include sense making as an indispensable factor in the analysis. Since people give meaning to their social reality as a basis for their actions, they will always react, in an uncontrollable, subjective way, to the (global and local) developments we want to study. An approach that denies interpretations, meaning and subjectivity as constituting elements of social behavior (or the importance of norms and power relations for that matter), and solely focuses on the “causes” in the actions of individuals, will never be able the tell the full story of the factors and actors that play a role in the restructuring of work taking place against the background of globalization. Picturing subjects, as the mechanical product of their objective circumstances does not provide us with an adequate picture of the intricate relationship between individual actions and social structures. This is all the more true when, as is currently the case, the kinds of comparison of social units that relied on their empirical separability c.q. independency cannot be guaranteed (cf. Appadurai, 2001, p. 5).

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Summarizing: within a reflexive approach, it is important that the researcher tries to get an adequate picture of the meanings, as well as the norms and power aspects related to the situation under study. A point of concern here is that the researcher studying restructuring processes in the work field should be careful not to take his or her own theoretical perspective as central and universal point of departure (cf. Appadurai, 2001, p. 19), as actors within different (local) contexts (re)act upon (global) developments from varying perspectives, in different ways. Actors are reflexively monitoring their action, which means that they use the knowledge of their social context to translate their intentions in actions, and at the same time monitor this process.3 In this sense people are able to steer and give direction to developments in their own specific, contextually determined way. Thus, another implication of a reflexive approach in social science is that we should realize that the generation of knowledge is always context-bound. The contextuality of knowledge and knowledge-production does not mean that the research scope is per definition limited to the specific context under study, though. Of course the aim is also to study broader developments, relations and structures, and to be able to produce context-transcending knowledge; generalization is and remains an important aspect of social research (Boog et al., 2001; Coenen, 1989, 1996). This could for instance be pursued by comparing structural characteristics (“family resemblances”) between different fields or areas (Bourdieu & Wacquant, 1992, pp. 233–234). These characteristics can be traced by combining relevant findings in the research field in such a way that they can function as a research program, as a model of systematic questions for which systematic answers are sought. The point is, to systematically examine various special cases with the purpose of inducing general characteristics from these cases. This can only be achieved via a bottom-up approach, though, and cannot be imposed by a top-down approach. The starting point of the research inevitable has to be the way actors reflexively shape their actions in their specific social context.4 Consequently, general statements about how the process of work restructuring takes place can only be expressed in modest terms, and certainly not in terms of general decontextualized laws of social behavior and predictions. Based on a permanent flow of new knowledge and in different contexts, actors develop their own strategies. We must learn to accept that in this process, knowledge is not primarily linked with accumulation, universality and certainty, but with contextuality, reciprocity and uncertainty. We must also accept that an approach in which the complexity of social reality is reduced to a few, preferably quantifiably factors, promises something it cannot deliver: the explanation and prediction of social behavior, i.e. knowledge that might be used as a tool for strategic planning of intervention. Studying developments in particular commodity chains such as consumer electronics, telecommunication or the automobile industry, its production

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processes in different regions, its logistic organization, its marketing etc. and the consequences of these developments for required skills, job security, increased inequality etc. in different regional and local levels can shed light on the way in which global flows are handled in different local contexts and on the dependencies and interactions between these different contexts. Above all, such an approach would provide us with more insight in the way workers (formal and informal, employed and unemployed) are able to get more grip on their (g)local situation. We should try to bring to the fore research strategies that are in line with these findings and examine in what way they can fruitfully be combined.5 We hope that with the contributions in this book we can make a start with this mission and lay a basis for a productive approach suited to tackle the future challenges in the research field.

INTRODUCTION TO THE DIFFERENT CONTRIBUTIONS Chapter 2 and 3 focus from different perspectives on the car industry, an industry that has played a key role in order to explain the models of production, the globalization process and its regionalization or adaptation to local contexts. In Chapter 2 Jos´e Ricardo Ramalho analyses the industrial organization in the Mercosur context. Ramalho studies new forms of work organization, regional development and the impact on labor relations in the car industry in Brazil. The increase of foreign investment in industrial activities and the need for firms to compete in the world market has accelerated the restructuring of production and new ways of managing the workforce in Brazil. It focuses upon a case study of Volkswagen’s bus and truck assembly plant and its workers at Resende. The unique feature of the plant’s production system rests on the relationship between the assembler (VW) and its component suppliers, where the component suppliers were involved in a joint enterprise with VW to establish a “modular system of production.” Results demonstrate “that certain patterns of participation, mainly in labor relations, were in a way also brought by the assemblers, which increased the demands for a certain kind of citizenship in the factories.” Jean-Pierre Durand analyses in Chapter 3 the labor changes in French car industry and illustrates how French auto producers were able to achieve these results by improving labor productivity. The companies have acquired, adopted and developed the principles of productive organization, including elements of various employee involvement strategies that led to Japan’s international success in the sector. The chapter present three levels of integrated production: (a) “tight flows” at several levels of production engineering; (b) teamwork as a form of work

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organization responding to the requirements of “tight flows;” and (c) adaptation of the satei system in the French context, understood as “logic of competencies.” Chapter 4 by Alfredo Hualde analyses the segmentation of skills in the case of maquiladora industry (known as in-bond industry). During the last 15 years of the 20th century cities in the Mexican northern border experienced an impressive increase of foreign direct investment especially in electronics and auto parts. Word class techniques, certifications like ISO 9000, more sophisticated manufacturing processes spread trough a handful of very big plants. Although these changes modified the skills requirements in technical levels, no important evidence has been found in labor lowest levels, where routine operations and scarce opportunities to build a career are the most common situation. The author discusses what are the challenges in this region given the mentioned segmentation in comparison to other international experiences such as Singapore and Malaysia. Sonia Guimar˜aes Larangeira focuses in Chapter 5 on aspects of the process of privatization/deregulation/restructuring as part of a global phenomenon in the telecommunications, considering the case of Brazil. The objective is to analyse the local implications and form of that global process focusing on its effects on the unions. The article examines the unions’ new strategies and agendas facing the dramatic changes in the industry. Some evidences indicate that the unions were negatively affected by the changes but despite the losses, the new situation forced a reaction and new strategies are being carried out although it seems difficult to re-gain the previous influence. The argument asserts that the global-local relations cannot be examined form an unilateral dimension, instead must be seen as a dialectical movement. Chapter 6 by Jorge Carrillo presents the case of television industry in a northern border town: Tijuana. The purpose of this study is to identify the impact of foreign TNC subsidiaries on the development of local suppliers. The productive integration resulted is complex and is based on four types: (1) in-house production; (2) vertical integration; (3) inter-maquila trade (between OEMs); and (4) outsourcing. Assembly TVs are linkages with passive and active components throw these four types. Purchases from national firms are higher than foreign suppliers. As opposed to foreign suppliers, Mexican firms do not have contracts with TNCs, and public policies have a low impact on the development of suppliers. Raquel Edith Partida Rocha presents in Chapter 7 the case of electronic industry, mainly computers. She analyses the impacts of this industry in local labor relations and wages. She points out that, although unions were reluctant to the arrival of TNC’s at the beginning, later they succeeded in developing a negotiating position on contracts and wages. Recently this position is becoming weaker again; due to the fact competition is coming from countries in Asia (especially from China). For the unions this means a reconsideration of policies in which the existing

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distinction between workers at local firms and workers at TNC’s is coming an important issue. Chapter 8 brings an old, but in the study of sociology of work new part of the service sector into focus: the gambling industry. Terry Austrin and Jackie West argue in their contribution that in this sector it is the specific framework of the nation/state which affects the form within which the mobility flows of persons, things and images in a globalising world are manifest. Using the example of casino’s the authors highlight differences in the way that national states together with markets and both global and local cross-cutting networks construct these key components of the “night-time economy.” They are using case studies from different parts of the world to underline their argument: the USA, Australia and the U.K. are countries under study. In Chapter 9 Leni Beukema and Harry Coenen plead for an approach in which the different parts of commodity chains are related to one another in order to understand how the global is involved in the local and vice versa in processes of work restructuring. The focus on the distribution part of this chain sheds light to the great importance of logistics in the relations within and between firms. Moreover this approach gives possibilities for distinguishing changes and opportunities to actors involved to analyse power relations within and between companies and in that context to find new ways to give meaning to labor relations in which more balance of power is established. The case of orchid plants sheds light on the different aspects that can be found with such an integral approach. Anne Posthuma pays in Chapter 10 attention to her research experiences with the application of a value chain approach in the Indonesian wood furniture sector to help develop good quality employment for local firms. In the Indonesian case this involves working with several wood furniture clusters that have been highly competitive, but are now faced with low-cost labor competition form China and must restructure. The challenge is not to follow the “low road” of also cutting labor costs. In this industry, as in many other global industries, it is increasingly clear that manufacturing capability alone is not sufficient for maintaining dynamic competitiveness. A wise management of natural resources, coupled with a strategic deepening of specialized skills (including design, branding and marketing) and entrepeneurial talents, will be necessary pre-requisites to upgrade the industry and improve its capacity to locally deal with global markets and global buyers. Posthuma examines the opportunities and challenges the Indonesian wood furniture sector faces to realize this upgrading of the industry. Finally Leni Beukema draws in Chapter 11 conclusions from the previous chapter to the central question of the volume: in which way is the global produced and reproduced in the local and what does this mean for the (re)structuring of work? She returns to the themes of this introduction chapter and highlights interesting

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relations between the different contributions to the volume. She also gives some substantive and methodological considerations about the expansion of the kind of research that contributes to more insight in the way workers are able to get more grip on their (g)local situation.

NOTES 1. Many articles in this volume are rewritten from presentations at the ISA-conference in Brisbane 2002 in two sessions of the Research Committee “Sociology of Work.” We want to thank Randy Hodson, editor of the Series “Research on Work,” for his continuous support and encouragement during the process of (re)writing and editing this volume. 2. Beside technical-industrial dangers and economic consequences, Beck mentions the weapons of mass destruction as a third main threat, a category we won’t discuss in the context of this contribution. 3. The monitoring of their action largely takes place unconsciously and in a routine way, though. In their daily behavior, people make use of matter of fact-knowledge and common sense insights that are usually taken for granted, so one is hardly conscious of having this knowledge. More than often, people find it difficult to put this kind of pre-reflective knowledge into words. But asked and trained to do so, they are able to give reasons for their actions. All this doesn’t mean that people can’t be wrong about the reasons for their action, though, or lack insight in the way their actions link together with other people’s actions to form structural patterns that turn out to be quite hard to change. 4. Contexts can not be approached as relatively immobile aggregates of traits, with more or less durable historical boundaries and with a unity composed of more or less enduring properties (as in traditional research is done with areas, Appadurai, 2001, p. 7). We must move away from such a “trait” approach, to a “process” approach in the research on the restructuring of work. Just like organizations, contexts reflect various kinds of interaction, in which actors (re)produce meaning, norms and power relations. 5. With this explicit formulation of our (normative) methodological points of view, we opt for what Appadurai (2001, p. 16) calls “strong internationalization.”

REFERENCES Appadurai, A. (Ed.) (2001). Globalization. Durham/London: Duke University Press. Beck, U. (1992). Risk society. London: Sage. Beck, U. (2000). What is globalization? Cambridge: Polity Press. Beukema, L., & Coenen, H. (1999). Global logistic chains: The increasing importance of local labour relations. In: P. Leisink (Ed.), Globalization and Labour Relations (pp. 138–157). Cheltenham/Northampton: Edward Elgar. Boog, B., Coenen, H., & Keune, L. (Eds) (2001). Action research: Empowerment and reflection. Oisterwijk: DUP. Bourdieu, P., & Wacquant, L. (1992). An invitation to reflexive sociology. Chicago: University of Chicago.

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Boyer, R., & Freyssenet, M. (2002). Productive models, the condition of profitability. Gerpisa: Palgrave, Macmillan. Burawoy, M. (1985). The politics of production. London: Verso. Castells, M. (1996). The rise of the network society. Oxford: Blackwell. Ching, L. (2001). Globalizing the regional, regionalizing the global: Mass culture and Asianism in the age of late capital. In: Appadurai (Ed.) (pp. 279–307). Coenen, H. (1989). Handelingsonderzoek als exemplarisch leren. Utrecht: Van Arkel. Coenen, H. (1996). The model of exemplarian action research. In: B. Boog et al. (Eds), Theory and Practice of Action Research (pp. 13–21). Tilburg: University Press. Cornfield, D. B., & McCammon, H. J. (Eds) (2003). Labor revitalization: Global perspectives and new initiatives. Research in the Sociology of Work (Vol. 11). Oxford: Elsevier. Delbridge, R. (1998). Life on the line in contemporary manufacturing. Oxford University Press. Dolvik, J. E. (Ed.) (2001). At your service? Brussels: P. I. E.-Peter Lang. DuGay, P. (Ed.) (1997a). Production of culture, cultures of production. London: Sage/Open University. DuGay, P. et al. (1997b). Doing cultural studies. The story of the Sony Walkman. London: Sage/Open University. Economist (2002). How about now? A survey of the real-time economy (February 2nd). Featherstone, M., Lash, S., & Robertson, R. (1995). Global modernities. London: Sage. Friedman, J. (1995). Global system, globalization and the parameters of modernity. In: Featherstone et al. (Eds) (pp. 69–90). Frobel, F., Heinrichs, J., & Kreye, O. (1980). La nueva division internacional del trabajo. Siglo XXI Ed. Mexico. Gereffi, G. (1994). Capitalism, development and global commodity chains. In: L. Sklair Ed., Capitalism and Development (pp. 211–232). London: Routledge. Giddens, A. (1990). The consequences of modernity. Cambridge: Polity Press. Lash, S., & Urry, J. (1994). Economies of signs and space. London: Sage. Miller, D., & Slater, D. (2000). The internet. Oxford: Berg. Nederveen Pieterse, J. (1995). Globalization as hybridization. In: Featherstone et al. (Eds) (pp. 45–69). Ritzer, G. (2000). The McDonaldization of society. Thousand Oaks: Pine Forge Press/Sage. Robertson, R. (1992). Globalization: Social theory and global culture. London: Sage. Robins, K. (1997). What in the world is going on? In: Du Gay et al. (Eds). Ruigrok, W., & van Tulder, R. (1995). The logic of international restructuring. London/New York: Routledge. Sassen, S., & Ching, L. (2001). Spatialities and temporalities of the global: Elements for a theoretization. In: Appadurai (Ed.) (pp. 260–279). The Economist (2002, February 2). Stretching spreadsheets: Collaborating virtually is becoming easier. In: How About Now? A Survey of the Real-time Economy (p. 6). Tromp, C. (2001). Towards a differentiated concept of reciprocal adequacy. In: B. Boog, H. Coenen & L. Keune (Eds), Action Research: Empowerment and Reflection (pp. 44–57). Tilburg: DUP. Valkenburg, B., & Lind, J. (2002). Orthodoxy and reflexivity in international comparative analysis. In: R. van Berkel & I. Hornemann M¨oller (Eds), Active Social Policies. Inclusion Through Participation? (pp. 179–197). Bristol: Policy Press. Weick, K. (1995). Sensemaking in organizations. London: Sage. Wood, S. (Ed.) (1987). The transformation of work? London: Unwin Hyman.

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NEW FORMS OF INDUSTRIAL ORGANIZATION, REGIONAL DEVELOPMENT AND THE IMPACT ON WORK RESTRUCTURING IN BRAZIL Jos´e Ricardo Ramalho ABSTRACT The increase of foreign investment in industrial activities has accelerated the restructuring of production and new ways of managing the workforce in Brazil, especially in the car industry. Based on the investigation of new auto plants in Rio de Janeiro state in the 1990s, this text intends to bring more arguments to a general discussion about the relationship between the global and the local, emphasizing the point of view of localities that receive foreign direct investments, and suggesting that transnational companies benefit from the conditions offered to attract investments, but also stimulate the creation of new political and economical structures that may produce new forms of participation from local and regional political actors.

INTRODUCTION The increase of foreign investment in industrial activities and the need for firms to compete in the world market has accelerated the restructuring of production and new ways of managing the workforce in Brazil, especially in the car industry.

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In the 1990s new locations, new management and organizational strategies have been introduced and experienced with significant impacts on the uses of work and trade union organization and also on regional development. Considering this process as part of the new patterns of globalization of social, political and economic activities, this text intends to bring more arguments to a general discussion about the relationship between the global and the local (see the introduction of this book), emphasizing the point of view of localities that receive foreign direct investments, and suggesting that in this process of mutual influence, transnational companies benefit from the exceptional conditions offered to attract investments (cheap labor, fiscal incentives etc.), but their presence in those localities also have the effect of stimulating the creation of new political and economical structures that may produce new forms of participation from local and regional political actors, including unionized workers. The discussion1 of these issues is based on the investigation of the impacts of the installation of new plants (VW, 1996 and PSA Peugeot-Citro¨en, 2001) in Resende, Rio de Janeiro state, especially from the case study of Volkswagen’s bus and truck assembly plant which has also introduced an innovative system of organization of production – the “modular consortium” – in which the relationship between the assembler (VW) and its component suppliers changes dramatically, and where the suppliers finance part of the factory and organize the assembly of their components on site. In relation to regional development, the installation of the plants was part of a new phase of foreign direct investment, stimulated by Brazil’s “automotive regime” of the 1990s, in order to attract auto-assemblers, especially to new locations, through a range of incentives that exempted companies from municipal taxes and construction of infrastructure, and helped them to build plants through funding by State Banks or even State Treasuries. With regard to the workforce, the establishment of new assembly plants has also meant an attempt to avoid trade union militancy that grew strong in traditional industrial areas of the state of S˜ao Paulo in the last thirty years. This chapter discusses the changes that have taken place so far as a result of the presence of the VW plant (and more recently of PSA Peugeot-Citro¨en and some of its suppliers), and of this kind of investment to the economic development of the region (Southern Rio de Janeiro state), especially in relation to new forms of institutional representation. It tries to establish a link between the increase in economic activities with the possible creation of new patterns of economic and political governance and its effects on local state policies and on working class mobilization. In this last case, it is very important to consider the role that has been played by the local union in negotiating the installation of the plant, as well as its difficulty to intervene more effectively in the process of wage bargaining in

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face of new organization of production, but also in its attempts to become an actor concerned with workers’ lives outside work.2

NEW FORMS OF INDUSTRIAL ORGANIZATION To discuss changes in industrial organization, one has to take into account the complexity and the interrelationship between the global and the local. It makes no sense to define the global excluding the local “as if the global had systemic properties that would overcome the attributes of the unities inside the global system.” At the same time, if the conceptions of locality can be understood as produced in global terms, this does not mean that all forms of locality can be consequently homogeneous (Robertson, 1992). It is from this perspective that this text is considering the changes that have been taken place in industrial firms (mainly transnational) now interacting with new information technologies and increasing the flexibility of production, management and marketing. In this context, industrial firms have also transformed their strategy of geographical location, moving it from apparently contingent choices into a structured internal element of “the logic of flexible accumulation” (Harvey, 1989). According to Castells (1999), the “new industrial space” could be described for its organizational and technological capacity to separate the productive process in different places, and, at the same time, to remake its unity through telecommunication connections and the flexibility and precision of microelectronics. Another aspect of this process, says Scott (1999, pp. 3–5), is “a resurgence of region-based forms of economic and political organization, with the most overt expression of this tendency being manifest in the formation of large global cityregions.” According to this author, “flexible forms of productive organization take deeper and deeper hold in modern economic and social affairs, new synergistic relations of all kinds seem to be multiplying on all sides.” The world’s automotive industry has also been under great transformation in the last years and has faced the dilemma of either reorganizing itself, so as to remain lucrative in an unstable international scenario, hoping for a possible leveling of competitiveness conditions in terms of products, capital and labor; or looking for regional and local spaces where it would be able to recreate the conditions of regulated growth (Freyssenet & Lung, 1997). This last possibility has apparently prevailed, and the example of the automotive chain of production confirms broader tendencies within the productive restructuring process, where location factors have become crucial. “Questions pertaining to logistics and factors associated with the creation of ‘dynamic externalities,’ such as local scientific and technological,

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social and urban infrastructure, as well as the qualification of human resources” have become essential in the new productive order and in the process of attracting new investments. One can therefore say that the territorial dimension ceases to be a mere production locus to become an endogenous variable in the production process (Bernardes, 1998, p. 35). This new configuration of the automotive industry has also brought into practice new productive strategies and the network organization of the auto-assemblers. In the particular case of Rio de Janeiro’s industrial cluster, still in formation, it is already possible to identify “decentralized and externally dependent networks from a complex and changing structures of interconnected and international networks” and to see in “each component of those internal and external networks specific cultural and institutional environments (nations, regions and localities) that affect the network in different levels (Castells, 1999, p. 211). All of the major assembly companies (VW, GM, Fiat, Ford, Toyota, Honda, Daimler Benz, Renault and Peugeot) have made significant investment in new plants and production facilities (around US$20 billion) in Brazil during the 1990s. The automotive industry has had traditionally a very important place in the industrial development of the country since the 1950s. The aim of the “new automotive regime,” government policy introduced in 1995, was to consolidate and attract new investments to the sector. According to Arbix & Rodr´ıguez-Pose (1999, p. 32), the main objectives were to keep the big assemblers and autoparts in the country; to restructure Brazilian firms; to attract new firms and to stimulate the construction of new plants and brands; to consolidate Mercosur.3 The pattern of investment in these new plants has been to move away from traditional industrialized areas in large urban centers, mainly in the South-East, in search of the best “fiscal incentives” from municipalities not far away from the most important consumer markets. This new move has also been related to important changes in the production system and in the relationship between the assembly firms and the component suppliers. The Brazilian component industry has been under radical restructuring (see Abreu et al., 1999), and in the case of the auto-assemblers, there has been identified a shift towards the outsourcing of mainstream activities (Gitahy & Bresciani, 1997). On the other hand, Salerno (1997, pp. 509–510) has documented the trend towards “industrial condominiums” that cluster suppliers around the main assembly plant, reducing transportation costs, streamlining integration and ensuring a steady flow of just-in-time supplies. The VW bus and truck plant, opened in Resende in 1996, was an advanced expression of this experimentation where the component suppliers were involved in a joint enterprise with VW to establish a “modular system” of production. Its inauguration had considerable publicity with both the company and the Brazilian

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government emphasizing its enormous significance for the Brazilian economy and the future of the automobile industry world-wide. VW argued that its new system of “modular assembly” was a complete and radical break with all that has gone before (Abreu et al., 2000; Ramalho & Santana, 2002). This break was made most clear by the fact that of the 1,500 employees brought together in the plant, 1,300 would be working for seven sub-contracting firms (tyres – Remon (Bridgestone); chassis – Iochpe-Maxion; axles and shock absorbers – Rockwell; transmission units and engines – Cummings and MWM; Cabin construction – Delga; painting – Eisenmann; steering and electrical work – VDO). In this new factory a group of US, German and Japanese companies shared the responsibility for the supply of components and the final assembly of all the vehicles produced. In each module, the firm (or firms) responsible for the supply of parts, sub-assemblies and systems step into the production operation to actually assemble the truck and the main production corridor became the domain of the sub-contractors. At each step in the assembly process, these companies are to organize the delivery and supply of components and co-ordinate the final assembly and installation of these in the vehicles and chassis. In the “modular consortium,” VW (the assembler corporation) is to remain outside the direct production process, focusing instead upon strategic functions such as overall vehicle design and architecture, as well as quality, product and marketing policy and sales. But, in this system, the assembler cannot simply ignore production. It also has to develop organizational capacities which will enable it to integrate a group of supplier companies – now co-manufacturers – into a production unit. As such, VW had a significant administrative staff, with its own office area preoccupied with monitoring the production flows.

REGIONAL DEVELOPMENT The relocation of new investments and new plants in the 1990s has been the main issue of the restructuring process in the automobile sector in the country. Industrial decentralization had already been present in the main states of southeastern Brazil since the 1970s (Pacheco, 1999), but the recent years’ trade liberalization has revealed a process with special characteristics. To consider these issues one has to take into account the relationships between the three administrative levels – union, states and municipalities –, specially since the 1988 Constitution, when regional (states) and local (municipalities) instances have recovered prerogatives lost during the military period (from 1964 to 1984). Local governments have become, according to Leite (1999), the main beneficiaries of the process of decentralization that took place with democratization, because

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tributary changes significantly increased the transfer of union and state funds to municipalities. Some problems, though, have been identified in this process. One of them is that “there is no institutional regulation to encourage cooperation between states” and more, “the increase of each state’s power has further encouraged individualistic practices rather than cooperation” (Abrucio & Costa, 1998, pp. 37–38). States would therefore carry out a predatory game between themselves and the Union (Federal government) and this would have also led to a noncooperative competition between states and municipalities, especially regarding tax warfare. In the competition established among the Brazilian states for the new investments of the car assemblers, Rio de Janeiro struggled to become an alternative and to avoid a historically secondary role in this industrial sector. A study of the Rio de Janeiro auto-parts industry in the beginning of the 1990s shows that it had the characteristics of an old and redundant sector (Abreu et al., 1999). With the installation of the VW plant in 1996 and the inauguration, in 2001, of the PSA Peugeot-Citro¨en plant in the neighboring municipalities of Resende and Porto Real, in the valley of the Para´ıba river, south of Rio de Janeiro’s state, especially in the last seven years, witnessed the installation of a new industrial cluster, centered in the automotive industry. This involves not only the assemblers but also some of their suppliers, besides the Michelin tyre plant and the Galvasud plant, an association between the National Steel Company (CSN) and Thyssen for the production of steel plates specially directed towards the automotive industry. The institutional, political and social changes entailed by this process provide the first elements for a more complete study of the impact of these industries on local politics, on labor relations and trade union action. The announcement of Volkswagen plant’s installation in Resende – particularly as this was an experimental plant – prompted much expectation over the effects that this would have on the economy of the municipality in general, and more particularly on the labor market. It is true that the anticipation created by the news of the plant’s establishment were not entirely fulfiled, specially regarding the number of jobs created, but there was strong political use of this fact by state and municipal governments. It should also be mentioned that the firm once considered bringing its suppliers into the municipality, something that failed to happen and greatly reduced the perspective of more jobs. However, the installation and current operation of the VW plant has led the municipality’s profile to a change. In the case of the VW plant, there were big investments in infrastructure. A total of US$15 million were spent in different projects such as an electricity plant for the factory, a new natural gas line of fourteen kilometers, a new road of 3.4 kilometers, and telecommunications infrastructure through optical fibre.

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In the process of political negotiation for the installation of both plants (VW and PSA Peugeot-Citro¨en), one of the most interesting aspects relates to the alliance between the state’s political objectives and the main local entrepreneur. It was the part played by this man, one of the municipality’s largest landowner, as he donated land for the plants that settled the deal. Although having a secondary role in the negotiation, the participation of local politicians cannot be forgotten. The creation of an infrastructure for industrial growth and the effort to attract new firms seem to have been the mark of several administrations. A survey of the press over the past few years reveals an upbeat context with more investments being channeled to Southern Rio de Janeiro State (Ramalho, 2002; Ramalho & Santana, 2001). The arrival of the auto-assemblers and their suppliers extended the range of action of existing companies, introducing a new set of concepts to the region previously dominated by the overwhelming presence in the nearby municipality of Volta Redonda of one of Brazil’s leading steel mills – CSN (Companhia Sider´urgica Nacional). As some businessmen noted, the shift from a steel belt to a hub with broader characteristics seems to have been perceived by companies that decided to reinvest or launch new businesses in this region. Data on the investments announced and actually implemented over the past five years in Rio de Janeiro State – particularly the municipalities of Resende and Porto Real – clearly indicate the direct effects on the local context of the arrival of these auto-assemblers, although VW and PSA Peugeot-Citro¨en work with different strategies. In the VW case, the companies of the “modular consortium” were not drawn to the region because of its proximity to the S˜ao Paulo industrial hub and the existence of the relatively modern highway running between Rio de Janeiro and S˜ao Paulo to handle the flow of parts and components required for its production activities. In contrast, PSA Peugeot-Citro¨en has been building up a belt of suppliers around its plant at Porto Real (probably because this is the first plant set up by this auto-assembler in Brazil). A survey of the volumes and types of investments in these towns and neighboring areas indicates that other companies revized their plans in order to take advantage of the general conditions ushered in by the establishment of this automotive hub. In general terms, the State industrial development agencies indicate that the Mid-Para´ıba region (including Resende and Porto Real) absorbed US$ 1 billion in private investments from 1995 through 2001, generating 9,200 direct jobs, behind only the State Capital itself: the city of Rio de Janeiro. (Gazeta Mercantil, Rio, April 9, 2001). The tables below show quite clearly the economic performance of this region, selected to house these new companies of the automotive chain. Table 1 shows that the Mid-Para´ıba region (including Resende and Porto Real) ranks first for per capita GDP, above even the Rio de Janeiro Metropolitan

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Table 1. Per Capita GDP by Region – Rio de Janeiro State – 1999. Region Rio de Janeiro State Metropolitan Region North-western Rio de Janeiro State Northern Rio de Janeiro State Hill Region Shoreline Lowlands Mid-Para´ıba Centre-South Rio de Janeiro State Ilha Grande Bay

Amount (R$)

Rating

10,198 10,397 4,380 5,176 6,579 4,669 11,258 5,205 8,354

100.0 102.0 43.0 50.8 64.5 45.8 110.4 51.0 81.9

Source: Boletim da Economia Fluminense, Year II, No 5, CIDE – RJ (Rio de Janeiro Information & Data Center), 2001.

Region, and almost double the levels achieved by much of the rest of Rio de Janeiro State. Table 2 best reflects the increase in the GDP for this region where the autoassembly plants were set up, perhaps revealing the first specific indications of this upsurge in investment standards and levels. Other elements confirm the comparative advantages of this region. Among the various attributes analyzed during the process that selected Resende and its surroundings to house these auto-assembly plants, education and skills were always been stressed, not only because this region ranks high in terms of schools, but also because it houses a Vocational Training Center run by the National Industrial Apprenticeship Service (SENAI – Servi¸co Nacional de Aprendizagem Industrial) that plays a dual role: training new workers and recruiting skilled labor. This guaranteed the main automotive companies in this region a welltrained labor-force at low costs compared to the labor market in other places of the country. Table 2. GDP Development in Resende, Porto Real, Itatiaia and Quatis (Mid-Para´ıba Region) – (In Reais). Towns Resende Porto Real Itatiaia Quatis

1996 (R$)

1997 (R$)

1998 (R$)

1999 (R$)

1,030,644.78 – 552,889.34 41,580.69

1,065,243.83 84,914.95 538,014.33 42,431.93

1,331,450.41 118,558.74 606,933.71 36,731.91

1,563,165.77 203,736.78 643,221.27 42,791.76

Source: CIDE-RJ (Rio de Janeiro Information & Data Center), 2001.

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WORK RESTRUCTURING The arrival of VW (and recently PSA Peugeot-Citro¨en) affected worker and trade union issues, offering the Resende Metalworkers’ Trade Union many challenges. Union leaders have had to deal with the professionals employed by the multinational companies during the wage negotiation processes over the past few years, backed by ample experience in labor relationships and trained to extract the greatest possible benefit from the low wages in this region. In addition to not being accustomed to negotiating with companies in the auto-assembly sector, the Trade Union has always been supported politically through strong and long-standing links to the workers at the CSN (Companhia Sider´urgica Nacional) steel mill, which was State-run until recently. The arrival of the new plants at Resende and Porto Real introduced changes in regional trade unionism. According to the words of its President in 1997, the Metalworkers’ Union saw the arrival of VW in Resende as an opportunity opening up more jobs for local workers, pleased to welcome a “symbol enterprise” into its field of action (Abreu et al., 2000). However, its pleasure over the possibility of new jobs may have given a false impression that the trade union would be disarmed by the powers of persuasion of the company, mainly because it lacked the experience to function and negotiate in the auto-assembly sector. Although the trade union leaders have always been guided by the spirit of reconciliation, they soon became aware of the difficulties encountered by the trade union in dealing with the “modular consortium” – different companies with different management policies, although constituting a common project; this also reveals that the strategy of the consortium to some extent undermines the companies, faced with a possible radicalization. Public discussions in Brazil at the time the VW plant opened emphasized its modern nature and the contribution that it would make to the development of automotive production techniques. In spite of this however, the technological developments within the plant, and the changes in established work practices were very few. Not only through visits to the plant but also through all published accounts, it is possible to notice that the focus has not been in technology (robots, computers and the like) but rather on the surrounding environment of the work stations. In relation to labor, VW’s concerns are still quite orthodox. As stated by Arbix and Zilbovicius (1997) when they examined the beginning of the firm’s operation, group activities, for instance, were scarce and the autonomy of operators was restricted. However, although they observed that the whole conception of the plant had been based on a distinction between production and labor, isolating workers’ unions from any discussion about the plant’s configuration and operation, those

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first six years in Resende has presented new developments in terms of union participation. The wage issue has also been part of VW’s concern in Resende. In order to avoid disputes, the company insisted in 1996 that all the firms of the “consortium” would share a common wage and benefits agreement. The option for this town is part of its plan focused on the establishment of labor relationships different to those of traditional industrial areas of S˜ao Paulo. Resende had a further attraction of being a center for the For¸ca Sindical trade union which was seen to be conservative ´ in contrast with the socialist Central Unica dos Trabalhadores – CUT (Unified Workers Confederation) that dominated the unions in S˜ao Paulo. The For¸ca Sindical was considered, by VW, to be more “affable” with policies that were more in sympathy with the aims of the company. There was also the perception that in this new location the trade unions and the workers would be much less experienced and more receptive to business initiatives. However, the metalworker’s trade union in Resende, from the beginning, was not happy with the wage differential in relation to other regions of the country, and during the late 1990s this has also become a critical issue for the unions linked to the auto assemblers in other regions in Brazil. For these unions, the dispersal of plants away from “the ABC region”4 of S˜ao Paulo was seen to be part of a low wage strategy. In 1999, the two main union federations (CUT and Forc¸a Sindical) joined forces to draw attention to the fact that while wage levels in S˜ao Paulo’s “ABC region” stood at US$750 a month, those in Fiat in the state of Minas Gerais were US$400 and at Resende US$300. The trade union was also troubled in relation to the operation of “the modular system” within the VW plant. The workers were worried that the system, in its very nature, would produce vertical divisions within the work force that would operate to prevent successful plant-level bargaining. At one point this was confirmed when the company indicated that they were prepared to consider a wage increase for VW employees but not for the assembly line workers employed by the other firms. Although this approach proved unsuccessful, VW learned that it had to control wage discussions on plant level and took the role as lead wage negotiator for whole of the consortium. Furthermore, they had to consider new relations with the “comiss˜ao de f´abrica” (factory committee), established through the trade union’s demand after a strike in 1999. The first observations of these seven years show that, in its experience of negotiating with Volkswagen and the rest of its consortium, Southern Rio’s metalworkers union, although with a defensive strategy, has shown significant action to stand for the interests of Volkswagen’s workers, engaging in strenuous discussions to obtain wage advantages and labor conditions, and attending meetings organized at the plant’s gates. The climax of this effort may perhaps be the first stoppage,

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in November 1997, and other subsequent claims that led to a one-week strike in August 1999. The “complete harmony” with the union, mentioned by a Volkswagen director when he first came to the region, started to face some turbulence in 1997, when the firm and the members of its consortium decided to deprive a group of workers – assemblers from the consortium firms – of a wage raise granted to all workers, claiming that their wages corresponded to the reality of the region’s labor market. This led to the first stoppage at Resende’s plant. All through 1998, and especially in 1999, union action kept getting stronger. Resende’s plant was also chosen to be the first to cease its activities during the movement known as “strike festival,”5 whose strategy even managed to put together two opposing union forces – CUT ´ (Central Unica dos Trabalhadores) and Forc¸a Sindical. These last seven years have also shown other important developments of trade union participation, as the Metalworkers’ Union has established new partnerships and are specifically concerned with aspects of workers’ lives other than matters related merely to the factory floor. Furthermore, shifting institutional relationships have revealed initiatives that indicate a trend towards different types of association that may reflect a shift in economic and political governance standards at the local level. For instance, the active presence of the trade union on the Municipal Employment Commission – which is a forum bringing together representatives of the municipal government and its agencies with entrepreneurs from various economic sectors – reflects the development of these new links (Abreu & Ramalho, 2003). At the same time, there has been a recent initiative, with the local trade union representatives as one of the main incentivators, of discussing the creation of a “forum for the development of the valley of the Paraiba river” (2003), with the objective of putting together entrepreneurs, politicians, administrators and organized workers to discuss strategies and to organize a lobby in favour of the development of the region.

CONCLUSION The case of Resende’s cluster is still an ongoing experience, but it can already indicate some important elements to think about social, political and economic impacts in the region and in the workers’ organizations. At the same time, it brings arguments for a more general debate on the consequences of the clash of global strategies of the industrial sector with local strategies of development, revealing a movement that contradictorily does not operate only with the global interests of the firms but incorporates also interests of the local economic and political actors.

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First of all, the negotiation leading to the installation of automotive firms in the state of Rio de Janeiro confirms the combination of the worldwide strategy of the automobile companies in the 1990s to spread their investments to different regions of the world and to establish a networked kind of organization with the model of foreign investment attraction created by this Brazilian “automotive regime” – tax exemption, public investment in infrastructure, generous loans and donation of large areas of land. This process has also interfered with state and regional politics. The political influence of the state governor at the time was widely used, and the new process led to a reorganization of local political forces. Resende’s main businessman, for example, who donated the land for the construction of the VW plant, was the sponsor of a successful campaign to emancipate the district of Porto Real from the municipality of Resende, where PSA Peugeot-Citro¨en and other important firms are located. Secondly, there have been great expectations in relation to the effects of the new firms on the job market. Until 2001 only Volkswagen was operating, with PSA Peugeot-Citro¨en starting in 2001, and the number of jobs that were actually created at those plants was much lower than what had been announced. However, after the installation of the plants, it can be said that there was a considerable impact on the local labor market, in terms of direct as well as indirect jobs. The recent inauguration of PSA Peugeot-Citro¨en and other suppliers will probably give further strength to this process. Ulrich Beck and others have talked of the “Brazilianization” of the West’s economy, drawing attention to its flexible labor markets and large informal economy (Beck, 2000). The Resende case may signal a rather different side to this Brazilianizing process. On one hand, the firms have increased the formal labor market, practically making possible the formation of a “traditional” working class. On the other hand, in terms of organization of production in the case of VW’s plant the Brazilian operations were to be appreciated for their “conceptual” (the modular consortium) rather than their “technological” development. In the third place, the presence of multinational companies has not only increased the demand for formal jobs but it has been quite a move in relation to technical and formal education. The use of local qualifying institutions such as SENAI (National Service for Industrial Apprenticeship) was an important factor to promote the local labor force. VW recruited its new personnel from the lists of SENAI’s former students and together with PSA Peugeot-Citro¨en, have established a partnership with this technical school to qualify new workers. Municipal schools were also affected, with a growing concern to qualify good students for possible future jobs at the automotive firms. In the fourth place, this process has started the need for the creation of new actors and spaces for discussion and negotiation mainly related to labor issues.

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There are signs that there is a growing conscience of the importance of having a higher involvement with local demands of different social groups. For instance, Resende’s union is already part of other organizations such as the Municipal Labor Commission and it has been recently involved in the creation of a “forum” for the discussion of strategies for regional development. Lastly, the changes in trade union action and the increase of its activities have direct relation to the installation of the automotive plants in the region. The local union has managed to have a level of participation that ensures a permanent mobilization of workers at the new plants. Results of wage negotiations show that the union is rapidly adapting to the needs of workers in the automotive sector, even if its former experience was in steel work. They have managed to achieve, for example, the almost immediate incorporation of demands that have been discussed by unions with greater experience in the automotive sector in S˜ao Paulo and other older industrial regions. The higher level of formal education of workers created a greater potential for involvement in the struggles, even if they lack tradition in the automotive sector. Written communication was more effective than in older plants with a less educated workforce and mobilization could be achieved without direct contact outside the plant’s gate, the traditional form of union contact with workers. Although still in its beginnings, this experience of regional development, stimulated by new foreign investment and the implantation of VW and PSA Peugeot-Citro¨en in Rio de Janeiro’s State, can be useful for the discussion on new patterns of economic and political governance that develop from a combination of foreign capital (multinationals companies) with the dynamics of national industrial policies and the social reality of the involved localities. In fact, at this moment, it is possible to say that the new industrial reality has already deeply transformed economic life and labor relations in the region, and that a new dimension has taken place in terms of the acting of institutions and actors as they react positively or negatively to the inevitable changes that are brought by this development process. It is still difficult to see clearly any articulated opposition to the nature of this type of economic development, or any action that conciliates patterns of economic development and the preservation of rights. However, examples presented in this text demonstrate that certain patterns of participation, mainly in labor relations, were in a way also brought by the assemblers, which increased the demands for a certain kind of citizenship in the factories. That is what can be understood by the rapid growth of trade union participation, built in just a few years from a sometimes conflictual relationship with the auto assemblers in the demand for better wages and working conditions. This practice in the end has habilitated the Metalworkers’ trade union as an important local actor to the constitution of socio-political networks, in order to effectively intervene in the process of regional development.

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NOTES 1. This article was originally prepared for the XV World Congress of Sociology, RC 30 – Sociology of Work, Brisbane, Australia, July 7–13, 2002. I am grateful to the editors of this book for their comments and suggestions to this new version and, in Brazil, to Faperj (Projeto Cientistas do Nosso Estado) and CNPq for their support to the research project “O Global e o Local: impactos sociais da implantac¸a˜ o da ind´ustria automotiva no Sul fluminense.” 2. Data collection for this research has combined qualitative and quantitative methods. In depth interviews have been done with managers and workers of the plants; and with trade union leaders and municipal and state politicians and administrators. In terms of secondary sources, an extensive research was done on published materials from the firms, statistic institutions of the state and federal government and a regular following of the local press. Recently, a survey was done inside the VW plant in order to investigate the profile of the metalworker of the region and evaluate the experience of the “modular consortium.” 3. In the 1990s in South America economies that had previously been protected by tariffs and detailed state regulations, were radically transformed. Policies were introduced that favoured a more open approach to international trade and investment. These changes have involved collaboration and agreement between the independent nation states of Argentina, Brazil, Paraguay and Uruguay. This was formalized under the Mercosur – Southern Cone Trade Zone – which, created a major new market. 4. The belt of industrial towns that had grown up around S˜ao Paulo in the 1950s and 1960s (Santo Andr´e, S˜ao Bernardo and S˜ao Caetano) and also the place where in the 1970s a “new trade unionism” emerged challenging the dictatorial administration then in office, publicly violating trade union legislation and anti-strike regulation and triggering a revolution within the trade union structure by questioning the links between trade union leaders and the Ministry of Labor. At the same time, it was building up its legitimacy through factory-floor representation in the work-place. This movement flourished mainly among the metal-workers, most of whom was employed in the auto-assembly sector concentrated in this region. 5. A series of one day strikes in every car plant in the country in 1999, organized by two of the main Brazilian Union federations, struggling for a national collective agreement for all assembly workers in order to avoid the strategy of the companies of paying lower wages in Greenfield sites.

REFERENCES Abreu, A., Beynon, H., & Ramalho, J. R. (2000). The dream factory – VW’s modular production system in Resende, Brazil. Work, Employment and Society, 14(2), 265–282. Abreu, A., Gitahy, L., Ramalho, J. R., & Ruas, R. (1999). Industrial restructuring and inter-firm relations in the auto-parts industry in Brazil. Occasional Papers, 20. London: Institute of Latin American Studies/University of London. Abreu, A., & Ramalho, J. R. (2003). Regional development and new labor strategies: Trade unions and the new car plants in Resende, Brazil. In: D. Cornfield & H. McCammon (Eds), Labor Revitalization: Global Perspectives and New Initiatives. USA: Elsevier.

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Abrucio, F. L., & Costa, V. M. F. (1998). Reforma do Estado e o contexto federativo brasileiro. S˜ao Paulo: Fundac¸a˜ o Konrad-Adenauer. Arbix, G., & Rodr´ıguez-Pose, A. (1999). Estrat´egias do desperd´ıcio – A guerra entre estados e munic´ıpios por novos investimentos e as incertezas do desenvolvimento. Novos Estudos CEBRAP, 54. Arbix, G., & Zilbovicius, M. (1997). O Cons´orcio Modular da VW: um novo modelo de produc¸a˜ o. In: G. Arbix & M. Zilbovicius (Eds) De JK a FHC – A Reinven¸ca˜ o dos Carros. S˜ao Paulo: Scritta. Beck, U. (2000). The brave new world of work. Cambridge: Polity Press. Bernardes, R. C. (1998). A inovac¸a˜ o no capitalismo contemporˆaneo. S˜ao Paulo em Perspectiva, 12(2). Castells, M. (1999). A sociedade em rede. S˜ao Paulo: Paz e Terra. Freyssenet, M., & Lung, Y. (1997). Between globalization and regionalization: What is the future of the automobile industry? Actes du GERPISA, 18. France: Universit´e de Evry. Gitahy, L., & Bresciani, L. (1997). Reestrutura¸ca˜ o produtiva e trabalho na ind´ustria automobil´ıstica Brasileira. Unicamp, Campinas, SP, Mimeo. Harvey, D. (1989). The condition of postmodernity. Oxford: Basil Blackwell. Leite, M´arcia de Paula (1999). Desenvolvimento econˆomico local e descentralizac¸a˜ o na Am´erica Latina: A experiˆencia da Cˆamara Regional do Grande ABC no Brasil. DECISAE/UNICAMP Projeto Cepal/GTZ. S˜ao Paulo. Pacheco, C. A. (1999). Novos padr˜oes de localizac¸a˜ o industrial? Tendˆencias recentes dos indicadores da produc¸a˜ o e do investimento industrial. Bras´ılia, IPEA – Textos para Discuss˜ao, n. 633. Ramalho, J. R. (2002). Novas formas de organizac¸a˜ o industrial, desenvolvimento regional e os impactos sobre as relac¸o˜ es de trabalho. II International Conference Columbia University/ILAS-CEBRAP. S˜ao Paulo. Ramalho, J. R., & Santana, M. A. (2001). Promessas e efeitos pr´aticos da implantac¸a˜ o da ind´ustria automobil´ıstica no Sul Fluminense. XXV Encontro Anual da ANPOCS. Caxamb´u, Brazil. Ramalho, J. R., & Santana, M. A. (2002). The VW’s modular system and workers’ organisation in Resende, Brazil. International Journal of Urban and Regional Research, 26(4), 756–766. Robertson, R. (1992). Globalization – social theory and global culture. London: Sage. Salerno, M. S. (1997). A Ind´ustria Automobil´ıstica na virada do s´eculo. In: G. Arbix & M. Zilbovicius (Eds), De JK a FHC – A Reinven¸ca˜ o dos Carros. S˜ao Paulo: Scritta. Scott, A. J. (1999). Global city-regions and the new world system. Symposium Approaches to varieties of capitalism. Manchester: CRIC/University of Manchester.

MAIN LABOR CHANGES IN FRENCH CAR INDUSTRY Jean-Pierre Durand ABSTRACT Successive reorganization of production of work in the French car industry has led to a particular productive matrix. This productive matrix is very effective and has made gains of between 5 and 12% per year possible. The components of the matrix are tight flow, teamwork and competencies model and integration of production in the outspread firm. The matrix can be understood as a subsection of the post-Fordist model of capital accumulation. The question is put whether this matrix can overcome the contradictions between workers and employers and keep the French car manufacturers in profit over the long term.

INTRODUCTION The French car industry firms have gone back into the black over the last decade and a half, achieving quite exemplary levels of profitability: there are several reasons for this, but this paper deals with only one, namely the increase in productivity gains and more particularly the new sources of these gains. We shall not concern ourselves here, therefore, with the scale of this increase in productivity gains, nor with the methods of calculating it, still less with the product strategy of the car firms. We shall base our argument on the fact that considerable gains, of between

Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 39–55 © 2004 Published by Elsevier Ltd. ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13003-3

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5 and 12% per year, have been realized in the production processes under study. In general the firms in question are large firms or networks of firms, including some small and medium-sized firms. Leaving aside the technical origin of these productivity gains, we shall show how the successive reorganizations of production and work interrelate and come together in a particularly effective productive matrix. Each of its components, such as the integration effect, the tight flow, teamwork and the competency model, contributes to the improvement in productivity in different ways that it is essential to analyse subtly on the basis of field observations and by deciphering managerial policies and discourse. The coherence between these elements also helps to increase the effectiveness of each factor. Finally, the involvement and mobilization of the workers’ subjectivity are no longer necessarily rewarded, which is sufficient to show how the new system breaks with the Fordist employment relationship.

PRODUCTIVITY GAINS AND THE EMERGING PRODUCTIVE MATRIX If one asks what are the bases and sources of the new productivity gains achieved over a little more than a decade, the first answer that comes to mind is of a technological nature: both in workshops and offices the new information and communication technologies (ICTs) have made it possible to increase not only the productivity of labor but also the global productivity of the factors of production, particularly through the rapid reduction in the cost of calculating capacity thanks to microelectronics. But though ICTs contribute to these productivity increases, they are not, in our view, the main cause. Though the robot can replace several production line workers, it never replaces as many as people claim. For it requires the involvement of a considerable amount of human labor to make it work: supervisors, maintenance staff, workers to handle the pallets. In the office, microcomputers and information technology generally have greatly increased the efficiency of the white-collar workers, from the secretary through to the manager or the engineer. At the same time, management’s growing demands for information, increasing in volume and quality, have practically absorbed these productivity gains in the office. In addition, the process of monitoring performance and production in real time requires the processing of a greater and greater amount of ever more exact information. Finally, the complexification of production and still more of commercial transactions demands the processing of growing quantities of information. Though the

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ICTs contribute directly to productivity gains, they do so only partially and cannot by themselves account for the scale of these gains over the last few years. The ICTs are an indirect source of productivity gains to the extent that they lay the basis for a new stage in the rationalization of work. This can be seen in the case of Computer-assisted Production Management (CAPM), in which information technology allows very tight management of materials and people. In the same way, automated exchange of growing volumes of data will lead to an ever closer control of the process of producing goods and services and to further productivity gains. In this sense, when enterprise resource plans get up to cruising speed, the new productivity gains will come more from the rationalization of work and exchanges between people or between people and machines than from the automatic processing of information. Up to now it is not the ICTs which account for the bulk of productivity gains. Rather these come from the reorganization of production and the reorganization of work which is linked with it, that is to say a new system for mobilizing the labor force. These reorganizations can be grouped under the concept of a new productive matrix which arose during the last few decades (cf. diagram 1 below). This concept seeks to group together into one coherent system, under tension, three elements, different in nature but functioning together in the firm, itself profoundly changed in structure. These elements can be represented with the help of a diagram whose three poles are: the generalization of the tight flow with its consequences for the organization of work and the introduction of teamwork, and the competency model as the new system for mobilizing labor. The ICTs cut across these three poles. The reorganizations and innovations could not have taken place without them. Thus the tight flow system could not have been taken to the stage it has reached today with a management system based solely on pen and paper, since tight flow often demands instantaneous processing and communication of information. These three poles or this central triad of the labor process (tight flow, teamwork, competence) are to be placed within the context of the reorganization and restructuring of the firm (as a network) which is closely linked with them. These transformations rest on two essential principles, the integration principle and the network principle, and are geared to integration of research and production, functional integration, and integration within the extended firm (relations between the firm placing the order and the sub-contractor). The changes which characterize the central triad of the labor process (tight flow, teamwork and competency model) also impact on the three types of integration we have identified. In other words, one must combine the effects of the reorganization both of the center and of its context. A careful examination of Fig. 1 shows the

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Fig. 1. The Productive Matrix of After-Fordism.

close links established between functional integration and teamwork through the ICTs; the same goes for tight flow and integration within the extended firm or between integration of research and production and the competency model (the appearance of knowledge management bears witness to this close relationship). Finally, to avoid lapsing into a sociology of work concerned only with the immediate labor process, this productive matrix must be understood as a subsection of the post-Fordist model of capital accumulation which cannot be presented here in all its complexity.1 One should simply remember that the concept of production model constitutes a useful tool for organizing the heuristic to-ing and fro-ing (integrating both theoretical elements and data gained on the spot) between the micro and macro levels – without creating a pseudo intermediate level such as the firm.

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THE INTEGRATION EFFECT IN THE FIRM ORGANIZED AS A NETWORK The term “reticular integration” encompasses the major managerial reforms carried through over the last three decades, telescoping as it does the two concepts “integration” and “network.” For its strategic utility to be fully grasped, reticular integration must be broken down into three main components:
the integration of research and production of which the aim, in each firm, is to bring to the market, as quickly as possible, a product or a service resulting from scientific (or other) discoveries. For a firm generally pays a lower “admission fee” to a market if it gets into it as early as possible and it gains an economic advantage if it creates a new niche in a market. Whence the necessity for firms to keep watch for scientific, technological, strategic or commercial developments so as to be able to integrate any such developments into the goods or services they supply.
functional integration means integration within the firm and within the plant: it means de-compartmentalizing services and functions by reorganizing (functional integration) and ensuring the unhindered circulation and exploitation of computer data (data integration). The best example of this type of functional integration is simultaneous engineering, which enables the research department (design), the production engineers (production methods), and the workshop (manufacture) to work together and above all simultaneously so as to reduce the development time of a product, improve its quality, and to reduce its production costs. Such advantages should be the fruit of close co-operation between services, backed up by an intensive exchange of information drawn from common data bases and used by machines and software which are already automating a considerable amount of intellectual work.
integration within the firm organized as a network is another way of dealing with the activities of the firm that are farmed out to sub-contractors and suppliers, often described as “partners.” Whereas in the past the orders a firm placed with its suppliers were for simple products (components for a complex unit which the firm assembled itself), today the firm asks a principal supplier to design and manufacture the complex unit using components produced by secondary subcontractors. The same goes for the supply of services to the big firm. The firm organized as a network thus resembles a body surrounded by satellites, many of which have their own satellites around them, an increasingly complex system characterized by an intensive exchange of information. The interdependence of these actors, (or integration into the “network firm”), must in turn be combined with the functional integration (described above) within each firm if one is to

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understand the nature of the organizational transformations effected over the last two decades. As we shall see, these transformations are responsible for much of the increase in time pressure on workers in work situations which have changed and in which competition, (no doubt very real), is also used as a pretext for reducing the “porosity” of working time. Integration and the development of the network appear as forms of co-operation in work. Integration and the organization of work in network arrangements, like co-operation, are very efficient forms of work, which produce a global result much greater than the sum of its parts. However, the essential feature of the co-operation effect, as Marx showed already, is that it is not paid for by the employer to his workers, and that it is, in short, free. The same is true today for the integration effect or the network effect which increase the productivity of each worker or more generally of each unit of production without the firm having to pay for the positive effect of these new forms of work. Though all these aspects of the reorganization of the firm contribute to the increase in productivity, including in conjunction with the central triad of the labor process, it is nonetheless the latter which lies at the heart of these productivity gains and accounts for the depth of the transformations carried through over the last two decades, even if some of these changes have passed almost unnoticed.

THE TIGHT FLOW REVOLUTION Ever since Henry Ford we have known about the virtues of continuous flow production. The speed of the conveyor belt determines the rhythm of work of the people (if the size of the labor force remains constant). People’s work rate does not depend on a norm (for example the number of items to be produced per day) imposed on them by other people. It is a machine or a system of machines that dictates the speed of people’s work activity. The tight flow is much more demanding than the Ford-style production flow because over and above the work rate of the workers tied to the production line, it also mobilizes the workers less directly involved, (supervisors and maintenance workers) who are responsible for the continuity of the flow. The tightness of the flow requires the attention and the mobilization of all the workers. Without wishing to list all the applications of tight flow organization, one can say that it is so widely used today that it has become the dominant mode of organization of production and of work, well beyond industry as such. In the Fordist mass-production system, apart from the conveyor belt, which is limited to the assembly process, each work station produces by drawing from a

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stock upstream in the process and then establishes a stock downstream. In general, the organizers operate in bursts and campaigns. Which means that the same thing is produced for several hours or several days since changes in production are costly. On the basis that everything that is produced will be sold, a commercial stock supplies the final market. This system turns planning into a decisive activity which organizes the production flow, pushing the process from behind (Fig. 2). The tight flow system arose when production began to be regulated by demand, the idea being that the firm should manufacture only what the market had already ordered. This concept, generalized to the whole production line means that each work station, faced with uncertainty as to what it may be asked to supply, no longer establishes stocks as in the Fordist flow. Instead it must be able to send downstream the necessary products or services, at the right moment (just in time) and in the required quantities. From this comes a double flow: a flow of material heading downstream (with no or virtually no commercial stock) and a flow of information heading upstream. To complete the picture, one must point out that there is also an information flow going downstream relating to the planning of raw material supplies and the availability of the necessary means to make production possible. But it is certainly the information flow heading upstream which pulls the process and determines what is produced (Fig. 3). From the economic point of view, the advantages accruing from the absence of inventory and buffers have often been highlighted:
capital no longer tied up in buffers
ability to react fully and immediately to changes in demand
immediate identification of substandard or unsatisfactory products, leading to a rapid solution to the problem (formerly, the entire stock might have to be thrown away)

Fig. 2. The Pushing Flow.

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Fig. 3. The Pulling Tight Flow.


exposure of bottlenecks and malfunctions, formerly hidden by the existence of inventory and buffers. It seems to us, however, that though these advantages are very important, they are much less important than the organizational and political advantages of the tight flow system. For the need to maintain the tight flow has major consequences from the point of view of the organization of work, cultural changes and pressures on the workers. Maintaining the tightness of the flow implies all of the following:
eliminating breakdowns. Hence the establishment of Total Productive Maintenance (TPM). This involves a cultural change for the maintenance workers, who are no longer judged on their skill and speed at repairing a piece of machinery (something tangible, easy to measure and sometimes spectacular), but rather on their ability to prevent or anticipate breakdowns (something much less tangible from the repairman’s point of view). Paving the way for this change of mentality, the Japanese method of the 5 S (tidiness, order, cleanliness, getting rid of anything useless, rigour) is sometimes experienced as a sort of domestication of the workers who are being required to radically transform their behavior.
producing only quality goods,
rapidly changing production “campaigns” by means of the Single Minute Exchange Die
permanently improving the system of production, either from the technical or organizational point of view. This kaizen aims on the one hand at ending production hiccups and mechanical breakdowns, but above all its target is

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a permanent reduction of costs, particularly labor costs. Competition, first of all national competition in the case of Toyota which created the kaizen, then globalization lead managements quite “naturally” to require permanent productivity gains which can go as high as 20% per year in some firms. Over and above their purely technical functions (preventing any break in the tight flow) these socio-technical tools play a fundamental role in securing acceptance of the new productive matrix. They are in fact the means by which the subordinate workers are persuaded to share the firm’s objectives. Who can be opposed to quality? Who can object to being able to react immediately to the market? Who can be hostile to reductions in costs (and therefore to increases in productivity) to ensure the survival of the firm? The economic objectives are transmitted through technical points during meetings of the quality circles and progress groups. General objectives, like the demands of the shareholders, are translated into detailed micro-objectives relevant to the workers who are themselves enclosed within a restricted social and technical space. Announcing objectives that have no relation to daily life at work has little effect. But the introduction of specific practices directly linked to a concrete situation makes them tangible. In this case, TPM, kaizen, total quality, are the practices which correspond to globalization and the resultant competitive pressures as well as to the demands of the shareholders of the firms in question. In addition, these practices, which transform the relations between the shopfloor workers and the technical staff (technicians or engineers), and between the former and the supervisors put life into the participatory management system and supply it with real issues to discuss. The close relations that develop between all these social groups enable the firm to bypass the staff representatives or the union branch, or even make them redundant. At the same time, these localized micro-objectives can give the workers new scope for autonomy or at least give them this impression. These changes are more superficial than fundamental. The socio-productive techniques modify the discourse on work rather than the content of work.2 Though there are changes in the work of supervizing the processes, there are far fewer changes in the direct work itself. Rather than the content of work it is often the perception of work which has changed through the way it is presented, (though one must not gloss over these presentational changes nor underestimate their social impact). For routine, repetitive work still exists, or even expands, both in industry and services, with a considerable number of procedures to be followed, which may well increase with the development of ISO 9000 procedures. One can also show that work directives relate less and less to the tasks themselves and are pushed back further upstream, dealing rather with the objectives and the ways to achieve them.3 Nonetheless,

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these are still directives and the worker’s autonomy in carrying them out remains tightly constrained by managerial imperatives. Whether these socio-productive techniques increase the workers’ autonomy a little or simply transform the way work is seen, they do tend to get workers to accept more readily the new production conditions, based on tight flow and generally characterized by increasing work-rates due to the reduced porosity of work time. Putting tight flow at the center of the analysis is therefore justified by its extension throughout industry. The reorganization of workshops into islands of production puts an end to the rather anarchic process by which parts traveled around, sometimes spending months waiting to be machined. Instead of having homogenous machine-tool shops, with the parts traveling slowly between them, components of similar types are now grouped together and machined on lines, or islands of production using machine-tools dedicated to one or more types of component. The parts move from one machine to another without intermediate stocks (in a tight flow) following a strict schedule which the machinists have to follow. Similarly, simultaneous engineering, which combines design and production functions, means that the R&D engineers have to supply a continuous stream of information downstream to the production engineers to enable them to develop the future means of production. If one of the actors falls behind, he immediately causes a problem for the others. He therefore has no option but to produce at the same rate as the others. Consequently, the customer-supplier relationship appears, without this ever having been made explicit, as the practical conceptualization of the tight flow system. Not only does it apply to services (where it originated) and to industry, but it brings together all the characteristics of tight flow: just in time delivery of exactly the right quantity of goods or services of the required quality and always at the lowest possible price. If we now turn to an analysis of the effects of tight flow on work, its first effect is to mobilize all the employees. In the tight flow organization, one can talk of a “naturalization of constraints” in the sense that the requirements of the productive system, (instructions, procedures, time pressures, emergencies, all accommodated with minimum staffing levels) are no longer mediated by a man, the boss, but are built into the need to maintain the tightness of the flow of production. Thus the constraints seem to lie outside the social-economic world. They seem to be part and parcel of a neutral flow of materials. And like all matter, they appear to man as something external to him. The fact that the constraints are seen as something external gives them “natural” properties, independent of human will. They are thus transformed into constraints that must be obeyed absolutely. In fact, either the worker accepts the tight flow and its associated demands, or else he leaves the firm. The internalization of this acceptance of what seems part of the natural order

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of things is very different from the social relation that the worker used to have with his supervisors. Today the “gaffer is the flow.” Even the managers and supervisors are enslaved by the flow. Rather than commanding operations, they are caught up in administrative tasks whose main aim is to keep the flow tight. To help them in this, there is a new organization of work which fits coherently into the tight flow system of production.

TEAMWORK Maintaining the tightness of the flow is a collective task. The organization of work is therefore collective, unlike in the Fordist situation where each worker was on his own, tied to a fixed position or even to a machine. It might be desirable to invent a new term to describe tight flow teamwork. We cannot use “group work” because this term refers to the organization of workers in semi-autonomous groups, which originated in Scandinavia, while “teamwork” has strong Fordist connotations. But the present system, organized around the concept of the team is different from these earlier types of organization in the following ways:
the end of individual work stations means that to organize the flow of production of goods or services it has to be broken down into productive units, each of which has its own work group or team.
each team is collectively responsible for the quality and quantity of goods produced, quantity being generally calculated not in volume but by the proportion of capacity utilization.
the workers are more and more versatile. They can and they must work in any part of the production unit for which their team is responsible. The best operatives can also be deployed in other units if the need arises. This versatility means that knowledge, and particularly the know-how that each worker has acquired in the course of his personal experience is made public and socialized. This “making public” is moreover perfectly consistent with the socio-technical tools presented above (TPM, total quality, kaizen) since these are the medium and the instruments of this process. The versatility of the workers also means that they are interchangeable. The fact that each person’s know-how is made available to all and thus appropriated by the firm’s management by means of more and more sophisticated procedures weakens the individual position of the workers. The very high rate of internal mobility (and external mobility for that matter) illustrates the increased “replaceability” of the workers in general.
collective organization and collective responsibility in the team increase peer pressure on each individual. Delays, repeated absences, tiredness or poor performances are no longer picked up or criticized by the boss, but by the team

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which sees its performance worsened or sees each person’s share of the work increased if one of its members does not fulfil the average norm established in the team and by the team. Cold-shouldering by the team, stress, harassment at work, often originate in the teamwork system rather than being the result of an individual being hounded by a superior. It is a direct consequence of the “naturalization” of constraints that the weakest are forced out since by definition the constraints cannot be evaded.
the establishment of a team leader, who is one’s equal, one’s fellow worker gaining a little social advancement. For a slightly increased wage, and with no delegated hierarchical power, he agrees to perform a contradictory role: on the one hand, controling his peers, and getting them to accept the management’s aims as far as possible, while at the same time remaining a member of the team and as such tied to its tasks and to the constraints of the flow. However, his chances of promotion are all the slimmer because the flattening of the management structure, to which he is contributing by agreeing to control his fellows without belonging to the hierarchical structure, limits the number of promoted positions available to him. To summarize, the combination of teamwork and tight flow production is fully coherent. Independent work stations could never maintain the tightness of the flow, which depends so much on the interdependence of all those who could be responsible for a break-down. Only close co-operation between workers, collective labor, allows the tight flow to be maintained with reduced labor costs. Concern about production costs remains the priority for the management of the firm, and the question of tight flow cannot be separated from the question of reductions of costs. This, moreover, is the main lesson to be drawn from T. Ohno4 who organized justin-time at Toyota to reduce costs (and not only to eliminate stock and buffers tying up capital), so that everyone would get a clear picture of the waste of all kinds generated by mass production and the inventory associated with it. The Toyota Production System, based on the kaizen, on employees’ suggestions and above all on the permanent efforts of technical staff specialized in increasing productivity,5 aims above all at reducing labor costs. The labor thus squeezed out was then, within the Japanese system, transferred to other tasks or other factories. To conceive of the tightness of the flow without reductions in labor costs makes no sense in a competitive (not to say capitalist) economy. The two aims go hand in hand and each reinforces the other. No doubt the flow would be still tighter if all the causes of malfunction disappeared, if each team had sufficient human resources, quantitatively and qualitatively, to achieve its objectives. But the nature of the social system of production, capitalism, prevents this optimization since the analysis of costs in search of maximum profits leads capitalist firms to give priority to the

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reduction of labor costs. What is one to do when faced with the contradiction between the tightness of the flow and reductions in labor costs? Attempt to circumvent it by inventing another coherence between the organization of work in groups (teamwork) and the mobilization of the workers as agents who feel responsible for the success of the system of production. Making the workers feel responsible requires the mobilization of the workers’ subjectivity, a mobilization which is central to the competency model which has been introduced more or less throughout the world.

THE COMPETENCY MODEL In the Fordist model, the worker was paid according to the post he occupied, which was evaluated by technical staff according to allegedly scientific methods. The correspondence between the evaluation of the post and the worker’s professional grade was an implicit admission that all the workers occupied the same post in approximately the same way. It was up to the supervisors to ensure that this was indeed the case and “bad elements” were removed from the post or from the firm. Pay increases were collective and were tightly linked to the policy of the State (which in France fixed the annual increases in the minimum wage (SMIC)) and to the collective agreements, which decided on annual increases for each branch of industry. Only promotion arrangements were individualized. During the last two decades, essentially under the combined pressure of managements of firms and employer organizations, the system of remuneration has edged towards the individualization of pay. Increasingly it is the individual person who is remunerated, and above all the way in which he or she does the job. Increasingly, managements tend to reward the degree of mobilization of each worker taken individually. This degree of mobilization is called “behavior” or “competency.” Whereas a worker’s qualification, which used to be the criterion of fitness to occupy a post and therefore grading, was based on knowledge (generally acquired at school or in a training center) and on know how or experience (tricks and knacks picked up on the job), competency adds what we can call knowing how to behave. This rather ill-defined quality brings into the equation the worker’s attitudes towards his superiors and his fellow workers. It also includes his willingness to make himself available (overtime), his responsiveness and more generally his behavior faced with the demands of his job. In France, the definition of competency adopted by the MEDEF (Movement of French Firms, formerly the CNPF, the French employers’ federation) is revealing in this regard: “professional competency is a combination of knowledge, know-how, experience, and behavior operating in a specific context. Competency becomes

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apparent when put into practice in a work situation on the basis of which it can be validated. It is therefore the firm’s role to identify, evaluate, and validate competency and to further develop it.”6 In addition to the explicit inclusion of behavior which, as P. Zarifian points out,7 has become a “social competency,” this definition asserts that only the firm can validate competency. Any indexation of wages on qualifications awarded by the national education system or by other training centers should therefore be abandoned. Competency could only be evaluated and validated in a work situation. No longer could the worker therefore get his qualification recognized outside the specific work situation in which it was evaluated, except where a tight labor market in a particular branch or area overturned this position. Recognition of a competency would therefore have to be renewed every time a worker changed his employer. Consequently, this definition of competency creates a major imbalance between worker and employer compared with old-style collective bargaining since it pits the isolated worker, in search of a job and a wage, against the full power of the firm, which alone lays down the rules of the game and the criteria for evaluating competencies and behavior.8 The assessment matrices that we have collected in Japan, France and the United States all evidence the appearance of direct evaluation of individual behavior. They generally consist of two main parts, of equal length. The first part deals with knowledge and know-how (qualifications) based on the evaluation of objective performance at work. The second part relates solely to attitudes and behavior patterns. Certain rubrics can be particularly subtle in the context of teamwork, such as the following one used in a large Japanese motor cycle firm: “co-operation and collaboration with others and non-attachment to one’s own opinions and one’s own interests.” Here the aim is to assess each individual’s ability to work in a group. But other headings seem even more dubious, such as those which assess “self-control and control of one’s emotions” or “submission to one’s superior.” In France, in a firm which supplies parts for the car industry, the assessment form for workshop personnel relates to actual work performance: production, quality, safety, order and cleanliness, versatility. But the “willingness” rubric contrasts the very good worker, who “volunteers services before he is asked,” with one who “systematically refuses to do what he has been asked to do.” Here it’s essentially a question of overtime working in the evenings and especially Saturdays, which is refused, for example, by a worker who has already bought his house. Under the “sociability” rubric the very good employee is seen as someone who “doesn’t make negative comments to his superior and is polite and courteous towards everyone,” while the poor worker “displays an irritable attitude to superiors, colleagues and the cleaning staff.” This assessment of behavior is the basis of the competency model in which directives no longer relate to the tasks to be undertaken, but to the objectives to be

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achieved, without the necessary means (particularly in terms of staffing) always being supplied. Thus the competency model no longer checks on work but on the loyalty of the workers, to ensure that they will put all their skill and enthusiasm into their efforts to achieve objectives that are rarely negotiable, either in terms of what the targets are or how they can be achieved. This is yet another reason why only the firm is entitled to measure competencies! In evaluating loyalty, the competency model assesses conformity to the social norm established by the team and then demanded by the team and by the management to keep the flow tight. (This reflects a certain Japanese influence.) Thus assessment of the individual’s aptitude for collective work, and the evaluation of the worker’s personal commitment, fit perfectly coherently with teamwork, which itself fits coherently with the tight flow. Each individual must be versatile, willing to move anywhere within the company, and intellectually receptive. He must, in a certain sense, be dependent on the firm. Without sharing the view that this competency model necessarily leads to unhappiness at work, (even though this may arise in certain circumstances9 ), one observes rather the loss of possibilities of resistance or of trade union struggle, which allow space for autonomy and social games, which make conditions of work, even very difficult conditions, acceptable.10 We must, however, explain what induces individuals to adopt loyal behavior patterns, in line with the management’s expectations. In Japan, it is the desire to stay in the big firm, which pays its workers much better (direct wages and above all social advantages of various kinds), that accounts for this loyalty. This is what led us to put forward the concept of forced involvement11 to convey how little choice the workers have but to commit themselves to the objectives of the big firm if they want to stay in it. Elsewhere, particularly in Europe, insecurity of employment and fear of unemployment play the same role in leading workers to adopt the desired behavior pattern (total loyalty) if they want to get a job or keep the one they have got. One could, finally, show how the core-periphery model, which characterizes not only the extended firm, with its sub-contractors, but also all the departments of the big firm, divides the workforce into a core, composed of very well-qualified and quite well-paid permanent staff and a periphery, made up of rather insecure workers, whose qualifications are unrecognized, and who receive much lower direct and particularly indirect remuneration. The competency model can be used to threaten the workers in the core with a possible relegation to the periphery. Only committed people are recruited into the center, and only the most loyal are kept: they have the promise of progress or promotion in exchange for conforming to the expected behavior pattern. The periphery, which is used among other things to permit an immediate adaptation to variations in the volume of demand, also has the job of inculcating loyalty

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in the young workers, as the condition of their promotion from insecurity to (relative) job-security. The core/periphery model is a tool of social integration and/or a way of winning acceptance of the conditions imposed on the workers. For example, each person accepts an increased work load (a certain intensification of work through the reduction of the porosity of working time) in exchange for the hope of improvement: advancement, or a move to a better place (escaping from the assembly-line, or the telephone pool in a call center) for the workers in the core, or a permanent contract for those in the periphery.12 As a differentiated employment structure, the core/periphery structure contributes to the introduction of the competency model and forced involvement. And these are in perfect harmony with teamwork and the tight flow. Thus the model of the productive matrix, as defined above, is totally coherent. It leaves little or no room for opposition or resistance, since individual assessment is based essentially on loyalty. Not only does the model rule them out, but at the same time it develops practices conducive to social integration through participatory management and the socio-productive techniques associated with tight flow.

CONCLUSION: STRESS AND OPTIMISM This paper demonstrates the systemic coherence of the new productive matrix based on tight flow, teamwork and the competency model. Can this coherence overcome the contradictions between workers and employers and keep the French car manufacturers in profit over the long term? On the one hand, this is the model with which the car industry emerged from its crisis at the beginning of the 1980s, with borrowings from the Japanese model, so buoyant earlier through the introduction of lean production as systematized by MIT. It may, therefore, seem to be under threat when the conditions for the maintenance of forced involvement disappear, i.e. with a return to virtually full employment which would considerably reduce competition between workers; corporate welfare, which encourages Japanese workers to stay in the big firm, has little influence on French workers. These could, therefore, revert to forms of resistance and, for example, simulate loyalty to satisfy managerial demands while adopting a totally opposite attitude. In this case this new productive matrix would have been nothing more than a transitional model on the way to something else, as yet unknown. But looking at it another way, one can show that, during its last crisis of accumulation, and more precisely, in order to confront this crisis, the employers discovered new methods (at least new compared with the Golden Age),13 such as the systematization of job insecurity. It invented structural insecurity by

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generalizing the core/periphery model and extending it to the very heart of its operations (management of the labor force, management of capital, product design, etc.). From this point of view, during the crisis, the employers seem to have learnt much more than the workers, since, at the end of this crisis of accumulation, the balance of power between capital and labor seems far more unfavourable to labor if we compare the present situation to that of the Golden Age: just to take one example, the share-out of added value, labor’s share would seem to have gone down by 6% in France between 1979 and 1998. But, paradox of paradoxes, it is in periods of economic growth, when workers are under least pressure, that they learn most: the present period could, therefore lead to the invention of new forms of social struggle which would once again modify the productive matrix.

NOTES 1. Cf. for the presentation of the developing model of production, see our chapter “Le nouveau modele productif.” In: G. Bollier and C. Durand (Eds), La Nouvelle Division du Travail (L’Atelier, 1999). 2. See on this point J.-P. Durand, P. Stewart and J. J. Castillo (Eds), Teamwork in the Automobile Industry. Radical Change or Passing Fashion? Macmillan, 1999. 3. Cf. J.-P. Durand, “Les enjeux de la logique comp´etences,” G´erer et Comprendre, Annales des Mines, December 2000. 4. T. Ohno, L’esprit Toyota, Masson, 1989. 5. K. Shimizu, Le Toyotisme, La D´ecouverte, coll. “Rep`eres,” 1999. 6. CNPF, Objectif comp´etences, tome 1, Journ´ees internationales de Deauville 1998. 7. P. Zarifian, Objectif comp´etence, Editions Liaisons, 1999. 8. We repeat, this imbalance characterizes the general situation, but not in tight segments of the labor market in which the firm is subject to wage pressure from those selling their labor power: this situation was also true of the Fordist collective bargaining arrangements (cf. for example our first chapter on the presentation of the big socio-economic changes in Sweden in J.-P. Durand (Ed.), La fin du mod`ele su´edois, Syros, 1994). 9. On our critique of the extreme thesis of ontological suffering, at work in particular, see our article “Combien y a-t-il de souffrance au travail?,” Sociologie du travail, 3/2000. 10. See J.-P. Durand and N. Hatzfeld, Living Labor. Life on the line at Peugeot France, Palgrave-Macmillan, 2002. 11. Cf. J.-P. Durand and J. Durand-Sebag, The Hidden Face of the Japanese Model, Monash Asia Institute, Melborne, 1966 or R. Boyer and J.-P. Durand, AfterFordism, Macmillan, 1997. 12. We find here the whole subtle interplay between internal and external flexibility which cannot be understood without the issue of the search for mobility by workers who seek to get the best out of a structure which dominates them. 13. Translator’s note: the author refers here to the Trente Glorieuses, the name given in France to the long period of sustained growth, roughly stretching from the late 1940s to the early 1970s.

SEGMENTATION OF SKILLS IN THE MEXICAN NORTHERN BORDER: CHALLENGES IN A GLOBALIZED REGION Alfredo Hualde ABSTRACT During the last 15 years of the 20th century cities in the mexican northern border experienced an impressive increase of foreign investment specially in electronics and autoparts. Word class techniques, certifications like ISO 9000, more sophisticated manufacturing processes spread trough a handful of very big plants. Although these changes changed the skills requirements in technical levels, no significative evidence has been found in labor lowest levels, were routine operations and scarce opportunities to build a career are the most common situation.

A GENERAL VIEW OF INDUSTRIALIZATION ON THE NORTHERN BORDER OF MEXICO The Mexico-United States border is 3,200 kilometers long and stretches from the Pacific to the Atlantic Ocean (see maps). During the late 1960s, industrial activities in workshops that assembled garments, and electronic products spread over a few cities along the Mexico-U.S. border. Until then, in places like Tijuana

Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 57–73 © 2004 Published by Elsevier Ltd. ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13004-5

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and Ciudad Ju´arez, the main economic activities were limited to trade and services, or agriculture, as in Matamoros (Carrillo & Hern´andez, 1985; Hualde & Mercado, 1996; Quintero, 1997). Nowadays, about three of four jobs in the that industry still are in border cities. But, in the 1980s and the 1990s new investors selected cities in the central area of M´exico, or South, like Yucat´an, to place clothing maquiladoras; electronic are also found in Guadalajara in the Pacific area. These workshops, known as maquilas or maquiladoras, imported parts, components and pieces from different productive processes, assembled them and re-exported the final product to the U.S. Maquilas were born protected by laws coordinated by the Mexican and North American governments exempting temporary imports from taxes (Gonz´alez-Ar´echiga & Ram´ırez, 1990; Hualde, 1997). Thus, employment was created on the Mexican side, whereas the products were sold on the U.S. side at a low price, due to cost differentials both in wages and rent or utilities (electricity, water, etc.). The location of cities along the border facilitated operations and reduced transportation costs. The maquila is considered to be an Export Processing Zone like those existing in Central America and the Caribbean and in some Asian countries. The main difference with respect to other zones is the fact that this region shares the longest border in the world with the U.S. economy. What started as a relatively unplanned activity, grew gradually and since the mid1980s it underwent interesting transformations: more complex products, process and organizations and an impressive growth of employment provoked that the region was considered in a strategic manner by the federal government; in the academic field, research diversified and a lively debate started about the gains or disadvantages that the plants have brought to M´exico.

Critical Visions In the 1970s and the first half of the 1980s, the maquila plants were highly criticized by politicians and scholars since the investment of foreign capital through the Northern border of Mexico was considered to have negative effects. Prevailing nationalistic beliefs, together with the protectionist import substitution regime, clashed with what was considered a form of foreign capital penetration. Besides, academics focused in labor conditions of female workers in the border plants. Finally, as a local and regional strategy, the maquila was criticized for the small amount of productive chains it created (Carrillo & Hern´andez, 1985; Fern´andez-Kelly, 1983; Gonz´alez-Ar´echiga & Ram´ırez, 1990). Recently, some

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authors have pointed out that the way in which the maquiladora operates is a serious barrier to the building of productive links with the national firms (Dussell, 2003). A lot of these critiques arose, more recently, and not only in Mexico, particularly during 1993 and 1994, with the negotiation and signing of the Free Trade Agreement (NAFTA). The trade unions and environmental associations in Canada and the U.S. based their opposition to the agreement on the working conditions and environmental damage produced by the maquila (Hualde, 1997). At the same time, it is necessary to note that the maquila has been through significant changes in the last decade as a result of the restructuring processes in the international economy and to the dynamic existing in the regions with more maquilas. Apart from the assembly plants, there are affiliates of large television transnational corporations, such as Sony, Samsung, Philips, Hitachi, and U.S. and Japanese auto parts which are organizationally more complex and make use of more advanced technological equipment than the workshops of the 1970s. These innovative features opened up the possibility of transforming the border maquila into a different kind of manufacturing process. For instance, local business associations, the regional government and universities have initiated a more coordinated and reflexive action vis-`a-vis the maquiladora. It was often thought that border cities could draw more technology-intensive investment, whereas laborintensive plants would move to the central and southern regions of Mexico. However, by the end of the year 2000, this possibility was challenged by a new economic situation thas has brought important changes to the region and to the maquiladora industry: (a) Employment crisis due to the U.S. stagnation. From October 2000 to the beginning of the year 2002 losses reached about 300,000, 25% of the total jobs. In cities like Tijuana, this figure reached 50,000 (the number of plants in this city went down from 850 to 750) and in Ciudad Ju´arez –at the center are of the border- 80,000. (b) Asian maquilas, which represent about 40,000 jobs,1 threatened to move to China if NAFTA-related regulations would continue to be so confusing, changeable and detrimental to importing Asian components. The firms consider that the confusion prevailing around these regulations is as damaging as unfavorable regulations against third parties. (c) Export competitiveness was affected by the strength of the Mexican peso between 2000 and 2002. (d) Some border cities experienced an atmosphere of insecurity (robberies, theft) that frightened some investors. In this uncertain and paradoxical context, this work refers to the transformations that have taken place in the maquila from the perspective of the skills developed

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by the different strata of workers: direct workers, technicians and employees. Our main argument is that although the maquila has created jobs that require different skills in some professional and technical sectors, an important segment of direct workers is devoted to simple routine tasks in a very flexible labor market. This article is organized as follows: The first section presents the dilemma the regions face vis-`a-vis globalization and how work plays a differentiated role according to the kind of industrialization. The second section describes the transformations in employment in the border regions. The third section analyzes the skills developed by different strata of workers: direct workers, technicians and engineers. Lastly, it comes up with a series of conclusions. Data have been drawn by quantitative and qualitative research focused in the border maquiladora. Quantitative data are drawn from official statistics like Instituto de Estad´ıstica Geograf´ıa e Inform´atica (Inegi) and from a survey sponsored by Conacyt (Consejo Nacional de Ciencia y Tecnolog´ıa).2 Specific notes will be included in the text to indicate other sources.

REGIONS, WORK AND GLOBALIZATION There is general consensus among scholars of different disciplines about the importance the region has been gaining as a axis of economic development in times of globalization (Acs et al., 2000; Benko & Lipietz, 1994; Boscherini & Poma, 2000; Dini, 1996; Florida, 2000; Hualde, 2002). But, in times of globalization the new role of the region is not based on uniformity, but on specificities (Amin, 1999; Storper, 1997). One of the main differences linked to spatial dimension is that related to work. Since the 1970s, many authors have stressed that fragmentation of industrial production has to be understood in terms of spatial division of labor. Although in the 1980s and 1990s the structural and static visions have been substituted by more dynamic and evolutionary visions, differences among regions and countries are still very significant. As Castells has pointed out: What tends to disappear trough integral automation are the routine, repetitive tasks that can be precoded and programed for their execution by machines. It is the Taylorist assembly line that becomes an historic relic (although it is still the harsh reality for millions of workers in the industrializing world) (Castells, 2000, pp. 257–258).

And if tasks are different for skilled and unskilled works, for professionals and technicians, employment relations are more diverse, even when flexibility is the

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word that seems to embrace most of the changes that have been taken in many parts of the world (Crouch et al., 1999; De la Garza, 2000; Pollert, 1994). In a very broad perspective a contrasting picture emerges from discourses about labor; by one side, workers have to combine a more complex set of qualities to be employed: more diversified skills and different attitudes face to work; secondly, they have to be involved with the firms; third, they must work in a coordinated and efficient manner with other workers, and being prone to learn continuously, to have the capacity to solve problems and so on (Labarca, 1999). In contrast, part time and temporary work, familiar and informal work are among others, forms that are considered “atypical jobs” which in many countries are quantitative important. To understand this different assessment is useful to assume that labor markets are locally constituted. As Mart´ın (2001, p. 456) wrote: It is within specific special settings and contexts –“local labor markets” – that workers seek employment and employers hire and fire workers, that particular forms of employment structures evolve, that specific employment practices, work cultures and labor relations emerge or are imposed.

According to the former statement, what are the specifities of labor market on the Mexican border? What kind of jobs have been created in the maquiladora in the last thirty years? What are the main features of industrial relations? These are important issues to understand the recent history of the Mexican border cities.

THE STRUCTURE OF THE LABOR MARKET IN THE MAQUILA From its very initial stages in the seventies, the maquiladora industry has been considered as a sector where unskilled labor prevails. However, later investigations have introduced interesting remarks concerning the job market structure, although professional and technical employees used to be and still are the minority. Direct workers in the maquila represent about 80% of the employed labor force. Technicians vary between 11 and 12% and the so-called employees (white collars and managers who are not involved in the production process) represent around 7%. These figures experienced a slight evolution in the 1990s, observing an increase in the technicians and administrative workers. Technicians represented 11% of the employed personnel in 1994 whereas in February 2003, mounted to 13%. White collars went from 7.09% in 1994 to 8% in the first part of 2003. According to official data,3 the cities with the largest number of technicians are the border cities and Guadalajara. However, our review for the second part of

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the nineties shows interesting results for all maquiladoras in three border cities –Tijuana, Mexicali and Ciudad Ju´arez – that together account for about 40% of the employment in the maquiladora industry: (a) Figures for border cities are very similar to those for the whole Mexican maquiladora. (b) Differences between cities are negligible. (c) The job structure hardly has experienced any variation in the years we reviewed, although during the crisis 2000–2003 a slight decrease of direct workers is observed. Is this tendency similar if we only consider electronic and autoparts? The survey conducted by El Colegio de la Frontera Norte shows differences concerning the maquiladora industry’s structure. Ciudad Juarez is the city with the largest plants and the largest proportion of auto-parts industries. In comparison, in Tijuana where electronic industries are very important, occupational structure has more semiskilled labor, with 78% of direct workers. Mexicali is just between these two cities with almost 75% of direct workers and a little bit above 10% of technicians. In any event, the three cities have a smaller proportion of direct workers in the analyzed sectors, than the rest of the maquiladora industry in general (Table 1). The city with the largest number of technicians is Ciudad Juarez with a total of 15%. There are no great differences between cities concerning the number of administrative personnel. Interestingly, Ciudad Juarez is the city with a smaller number of management people. Mexicali has the largest number of managers, and Tijuana is in between. In all three cities, the direct percentage of workers in smaller that the national level where the percentage is always near 80%. Thus, electronic and auto parts maquiladoras in these three cities have a structure somewhat less intensive in Table 1. Employment Structure in Three Border Cities. % Average Cities

Workers Technicians Clerks Managers Source: Colef (2002).

Total

Tijuana

Mexicali

Ju´arez

78.5 8.9 9.0 3.2

74.4 10.3 10.5 4.3

71.5 15.8 10.6 2.7

75.1 11.8 9.9 3.2

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Table 2. Employment by Economic Sectors. % Average Sector

Workers Technicians Clerks Managers

Total

Electronic

Autopnts

75.8 11.3 9.9 3.1

73.1 13.2 10.0 3.3

75.1 11.8 9.9 3.2

Source: Colef (2002).

direct work, than the rest of the maquiladoras in those cities and on a national level. How can we explain the larger intensity of technical work in Ciudad Juarez? Is it because of the importance of the auto parts sector in comparison with electronics in the other two cities? The auto parts sector has less direct work (73%), than the electronic sector, but differences are lesser than those the cities present between them. The structure of the labor market is more related to the city (specificities of the local labor market) than to the economic sector (Table 2). One remarkable finding is the stability of the maquiladora job structure during the decade of the 1990s and the beginning of the 2000s: none of three cities show an important increase in employment of technicians during the 1990s, but just in the second half of the 1980s. On the other hand, although if the job structure of the two selected sector has less direct workers, it is still very different from Mexican manufacturing. Rodr´ıguez Vargas (2002, p. 116) argue that maquiladoras have one administration employee (includes technicians), for each three workers. The proportion in the maquiladora industry is one to every thirteen.

Job Structure by Source of Capital Since the end of the 1980s it was considered that Japanese plants were the most technological advanced and therefore more intensive in technical work. However, the comparison of the job structure from the survey among Asian, European, Mexican and American plants does not seem to support clearly the former assertion. In the analysis differences by source of capital are the following (Table 3): (a) Japanese plants have a large proportion of direct workers and occupy the first place concerning the proportion of technicians and second place concerning

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Table 3. Employment Structure by Source of Capital. Category

% Average Capital Origin

Workers Technicians Clerks Managers

Total

Mexico

EE.UU.

Japan

Korea

Asia

Europe

Other

75.3 11.8 9.3 4.0

74.9 11.5 9.7 2.8

75.6 12.4 11.3 2.6

77.4 10.0 7.5 5.2

71.7 8.0 12.3 7.4

80.2 7.0 10.2 2.8

83.5 2.5 12.0 1.5

75.6 11.1 9.9 3.2

Source: Colef (2002).

administrative personnel. However, they have a very small proportion of managers, compared to Korean and other Asian plants. (b) Korean plants are the ones with the highest proportion of direct employees, and an important number of managers. (c) The rest of the Asian maquiladoras have an important number of directors or managers. This means that non-Japanese Asian plants have a very hierarchal organization with a strong administrative presence. On the other hand, the difference in technicians between Japanese, Mexican and American plants is not very significant. Analysis of the plants by their size is also important because it is frequently thought that large plants have a larger proportion of technical and administrative personnel, but in the cities that were investigated, there are two significant results: First, the micro plants are the ones with more technicians and administrative personnel, and second, that differences between small and large plants are not that important. About this, we offer the following explanation: with reference to micro-plants, simply because they are so small, the presence of technicians distorts the job structure in relative terms. This is confirmed for example, in the case of engineers because micro-plants generally have two engineers or less. Moreover, some authors claim that workers employed in large plants that compete internationally characterized by technological complexity do not receive higher pay (Bensus´an & Reygadas, 2000; Quintero, 2001). Quintero, in a study of a large plant with high technology in Matamoros (Deltr´onicos), noted that most workers are devoted to assembly tasks and their wages are only slightly higher than in the other maquilas. Bensus´an and Reygadas (2000), in a study of five plants in Chihuahua, attribute the low wage level to a lack of institutions, trade unions, and labor authorities that establish a clearer correspondence between wages and

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65

productivity. These authors refer to wages in the maquila as “artificially depressed wages.”

WORK ON THE LINE What is revealed by the information on the maquila workers’ specific labor activity?4 It shows that most work is manual although it is sometimes carried out with instruments that do not require much technical knowledge, such as electric soldering or microscopes. This is a description corresponding to assembling in industries producing electric/electronic products, medical instruments and toys. Assembly work along classical lines is not therefore the only form of work in the maquila. There is also individualized manual work or teamwork in work stations where several operations are carried out; workers in this case are multitask operators, rather than multi-skilled workers.5 It is nevertheless unlikely that the different operations result in greater task complexity. In addition, since firms aim to improve product quality, an increasing number of workers are devoted to inspection, supervision and quality control, or programming simple operations (Hualde, 1999). The type of task depends to a large extent on the product. Sound systems, for example, are checked in closed chambers in order to detect loudspeaker fidelity. In general, these operations demand care, concentration and in many cases manual skill of which many managers claim women are more capable. In this sense, gender images continue operating, although masculine employment in is progressively reaching 50% in border cities (Abramo & Todaro, 1998). A remarkable example of training and more complex work was found in Samsung where young women were sent to Korea for three months to learn how to adjust the image in TVs. Positive dimensions of work on the assembly line coexist with less friendly realities of everyday work. The clean and illuminated facilities that large and modern companies have today, undoubtedly represent a move forward with regard to previous precarious work places, although wood and furniture plants are important exceptions. Management professionalization and courses in human relations for supervisors probably humanize everyday work in the maquila in Tijuana, but excessive attention and concentration on meticulous tasks produces tiredness, boredom and may even cause occupational injuries and disease (Kourous, 1998). On the other hand, this type of work lacks the characteristics of enriched work: variation, creativity, and autonomy. We could summarize the previous observations noting that although in some areas work in the maquila presents more favorable conditions than in previous

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stages, it is clear that the situation continues to be more deficient with regard to employment conditions. Research about this dimension has undoubtedly found elements that coincide with other situations that are far away in time. To take the expression of Castel (1995), the proletarian condition in the border cities is characterized by: an income that does not allow the workers to consume what is not essential (except young single female workers); the weak nature of the relation with the firm; and a legal guarantee, the collective bargaining agreement, with little relevance to ensure employment stability or other working conditions (Castel, 1995, p. 328). These three aspects help introduce the theme that for us decisively conditions the character of employment in border cities: the instability during most of the nineties and the uncertainty since 2000–2001. Most of the employment in the maquiladoras has been characterized by high rates of labor force turn-over, at least until the 2000–2002 crisis (Aguilar, 1996; Canales, 1995). Although the causes of this turn-over may be contentious, an important consideration is the effect on the worker. They cannot accumulate seniority rights and they may interrupt learning processes. Turnover as a lasting characteristic of the labor market hinders the creation of labor organizations and the constitution of collective identities linked to a job or trade. After the tightening of the labor market in 2001 turnover monthly reates decreased substantially: from 15.5 to 4.8% in Mexican plants; from 7.5 to 3.7% in American plants; from 12 to 5.7% in Asian plants and 7.65 to 5.2% in European plants (Colef, 2002). This open a new situation in the labor market the reduction of turnover rates must mean savings associated with hiring, and a possibility to consolidate better training amongst the direct employees. There would also be better conditions for employees to have longer careers and a sense of belonging towards the company. However, in 2003 it is unknown if lower turnover has produced changes in the mentioned sense (Table 4). If workers do not seem to accumulate innovative knowledge in the maquiladora, how the plants introduced new products and processes? Who are in charge of new operations? From our point of view, technicians, but particularly engineers have to be considered the main actors. Table 4. Monthly Turnover of Direct Workers by Source of Capital.

Average in 2001 Average one week before the survey Source: Colef (2002).

Mexico

EE.UU.

Japan

Korea

Other Asia

Europe

15.5 4.8

7.5 3.7

13.0 6.3

12.8 5.6

8.9 3.1

7.6 5.2

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Technicians There are three types of technicians in the border maquila: engineers who have not completed their studies; technicians graduated from middle and higher education colleges and the so-called empirical technicians. The maquila hires chiefly technicians specialized in electro-mechanics, electronics and maintenance. To a lesser degree, it also requires technicians in tool making, mold making for plastics and production. Their main responsibilities are equipment repair, installation and maintenance, and process programming. In interviews with the technicians we confirmed heterogeneity regarding the types of technicians and their time of training. Although averages show that training in general does not go beyond a week’s time, there are cases of numerical control operators who receive training up to three months. The labor and life trajectories of those graduating from technical courses vary significantly. In a survey conducted in Tijuana and Mexicali we found interesting results:
Almost half of them went into higher studies because they considered that technicians faced limited job opportunities.
Tree of four in the university studied engineering or related degrees. In what refers to their occupations, half of them were employed in the maquiladora industry in taks mentioned before. Approximately one third had jobs not related to their technical studies. The interviews also indicate that male technicians in particular have professional careers in the maquiladora. Many work and study at the same time. Some technicians start to work in the maquila as operators, then get a technical degree and later on try to graduate as engineers. It should nevertheless be noted that the plants have not foreseen general rules for professional upgrading. Technicians negotiate the conditions under which they can work and study with their bosses on an individual basis. They usually request more flexible schedules. However, they not always get what they want and in any case their bargaining power derives from good personal relations. It is not clear whether upon returning with their technical degree they will immediately get a significant increase in their wages.6 As we said before, technicians’ main tasks are repairs and maintenance. The education they get is essentially practical, although some large plants offer longer training which, for some technicians, compensate for their low wages. In average, their income is twice the average income of workers, about 600 monthly dollars. There is also an important difference between graduates from technological schools, those who are currently studying engineering, and those seeking to become

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more specialized technicians. The latter are not limited to the tasks they have been appointed, they adjust equipments and may even introduce minor innovations.

Engineers Certainly, engineers, whether they work as such or as managers, are the employees with the most solid and long-lasting careers in the border maquilas. They also receive the most interesting training both from a technical and organizational point of view. Training is the way in which the plants try to close the gap between acquired knowledge and the knowledge the plant requires. This, however, does not mean that the most deficient professionals receive more training. The opposite is the case. Plants offer greater opportunities to the engineers who progress most, who show a greater learning capacity and interest. Many of them request the firm send them to courses they find out about through fax, e-mail, or other means. In other words, training to a certain extent depends on the workers’ strategies. Reducing learning to training is a second mistaken idea. Learning involves different dimensions and is acquired through a variety of means. So-called informal learning continues being essential to the maquila and external mobility enriches it. One of the interviewees systematized his way of seeing learning with the following words: I consider that what I have learned is due to three factors: sharing with people who have more experience, the every day problems we have that push us to use or create new problem-resolution methods as well as the basic methods we were school taught (E. V., manufacturing engineer, 4 years’ experience).

In subsequent studies conducted on local engineers employed in the maquila in Tijuana and other cities along the border in Northern Mexico, we have noted various important characteristics (Hualde, 1995, 2001).
There is an important variety of tasks: logistics, production, manufacture, human resources management, process engineering and even design.
Ascending professional trajectories up to the most highly recognized management and general management, mainly in plants with North American capital (Contreras, 2001). Asians reserve the highest positions for Asians exclusively.
Turn-over between different plants with the objective of completing the learning provided. There are cases of local engineers being recruited by headquarters in the United States after working in border cities.

Segmentation of Skills in the Mexican Northern Border

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Training in the plant and headquarters. Asian plants send certain groups of engineers (as well as technicians and workers) to train at their headquarters.
Among the engineers, there is a web of social networks that enable the creation of flexible teams in different plants. This type of collective can be compared to what has been called “action communities” (Zarifian, 2001) or practice communities. One important issue about maquiladoras is the lack of integration to national firms and another one is that maquiladoras have not transformed the border industry through spillovers. However, we noted in the mid-1990s that a interesting cluster of tool making plants had developed in Ciudad Ju´arez (Hualde & Mercado, 1994). More recently an interesting study about the sector (Dutr´enit et al., 2003) has calculated that about 160 plants have survived in this sector that it is also trying to supply the aerospace industry in New Mexico and other industries in Massachusetts,7 Moreover, a few technological intensive firms have been created in plastic mold design and electronic devices these were created by mexican engineers that before worked in the maquiladora for about 15 years.

CONCLUDING REMARKS Since the mid-1980s, the border cities in Northern Mexico have been experiencing a large growth in electronic, auto part and other plants through the investment of capital from the U.S. and Asia, particularly Japan. These plants show important differences with regard to most of the plants in the 1970s, described usually like workshops with a very simple organization, precarious work and deficient facilities. Large plants have hired thousands of technicians and professional employees, but the employment structure remains unchanged in general terms. The hiring of this type of personnel concentrates in a few plants with a larger number of technicians and engineers. Research shows that the assembly line personnel carry out more than purely manual assembly tasks, but do not demand technical knowledge like that of a skilled worker. Some carry out adjustment tasks and check specifications that need care and attention and some knowledge of elementary calculus. One of the crucial aspects for training is precisely the need to care for product quality. On the other hand, the relative enhancement of tasks among certain strata of workers does not imply that plants develop wage-scale and incentive structures that encourage promotion. Industrial relations conditions are based on fragile conditions of legality and a work market has been characterized by high turn-over since 2001. Since then, turnover has lowered substantially, but employment remains stagnated.

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Technicians mainly carry out maintenance, adjustment and repair tasks. However, in interviews conducted in Tijuana and Mexicali, it was seen that learning mostly depended on individual efforts and the relation with the boss, usually an engineer. Promotion in the plant is conditioned by organizational characteristics. In the large plants, there tends to be intense competition for promotion. Technicians with more initiative aim to study engineering because this seems to be a clear means for promotion. At least until the year 2000, engineers were the stratum with a greater variety of tasks and with greater possibilities of reaching well-paid positions. Although cases of stagnated itineraries have certainly been found, many of the young people graduating from local institutions become manufacturing, materials and quality managers. Asian plants send them to Japan or Korea to take courses or learn about new product characteristics. Two types of professional areas seem to be more promising for this sector that is still a minority: On the one hand, areas related to information and communication technologies. On the other hand, developments linked to product design that are being tried out in some of the large plants. In any case, without looking down on the collective learning of these professionals and the importance this has for the city and region, the large differences between the workers (most with elementary or secondary school education only) and the professionals is an obstacle for collective learning, which could be even more beneficial for the region. In the developed world authors, such as Sorge (1987), has underlined the need to reduce the differences between workers and engineers to strength efficiency and quality. Although Nonaka and Takeuchi (1995, p. 151) give greater importance to the assembly line managers, middle managers and top level managers, they claim that everybody in a company must create knowledge. One of the conditions to create knowledge is that information should flow, which assumes a different kind of hierarchy from that existing in the plants analyzed. However, in the border plants information and knowledge are restrained to a minority of the professional staff employed in the maquiladora. The border region thus faces challenges in the development of institutions that interact efficiently with the firms. As far as the labor market is concerned, learning levels, wage conditions and job opportunities are still excessively segmented. Regional institutions must work together to offer a more skilled workforce; on the other hand, they have to attract plants more interested in collaborating with localities in which they are established. In cities like Tijuana the arrival of a new plant for Toyota can create a more integrated cluster that those of the electronic industry, because the car industry is essentially linked to the north American market. But, a more active and innovative action by local actors is required.

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NOTES 1. Colef (2002), Data for Tijuana, Ciudad Ju´arez y Mexicali. 2. Research project “Aprendizaje Tecnol´ogico y Escalamiento Industrial. Perspectivas para la Formaci´on de Capacidades de Innovaci´on en las Maquiladoras en M´exico,” Colef, Flacso, Uam, M´exico 2000–2003. 3. Instituto Nacional de Estad´ıstica, Geograf´ıa e Inform´atica. 4. The description of tasks came from observation in plants, and interviews with workers. It is mostly qualitative and significant, and cannot be analyzed in statistical terms (see, Contreras, 2001; Hualde, 2001). 5. The workers diversify their knowledge, but without broadening their cognitive basis to carry their tasks out. 6. These are results of a training project, “Industrial Learning, employment and Training of technicians and workers in the maquiladora industry” sponsored by the Mexican Council of Science and Technology (Consejo Nacional de Ciencia y Tecnolog´ıa), Reference Number 35049-S. 7. Personal communication by Ing. Guillermo Fern´andez (Fundaci´on M´exico-Estados Unidos para la Ciencia).

REFERENCES Acs, J., Zoltan, J. de la Motte, & Gilles, P. (2000). Regional innovation: In search of a global strategy. In: J. Z. Acs (Ed.), Regional Innovation, Knowledge and Global Change. London: Pinter. Aguilar, I. (1996). Competitividad, flexibilidad y rotaci´on de personal en la industria maquiladora del televisor en Tijuana. Tesis de Maestr´ıa, El Colegio de la Frontera Norte, Tijuana, Baja California. Amin, A. (1999). The Emilian model: Institutional challenges. European Planning Studies. Benko, G., & Lipietz, A. (1994). De las redes de distritos a los distritos de redes. In B. Georges & L. Alain (Eds), Las Regiones que Ganan (pp. 365–375). Spain: Editions Alfons el Magnanim. Bensus´an, G., & Reygadas, L. (2000). Relaciones Laborales en Chihuahua:un caso de abatimiento artificial de los salarios. Revista Mexicana de Sociolog´ıa, 2(LXII), 29–57. Boscherini, F., & Poma, L. (2000). M´as all´a de los Distritos Industriales: El Nuevo Concepto de Territorio en el Marco de la Econom´ıa Global. En: Mi˜no & D´avila (Eds), Territorio, conocimiento y competitividad de empresas. Buenos Aires: Universidad Nacional de General Sarmiento. Canales (1995). Condici´on de g´enero y determinantes sociodemogr´aficos de la rotaci´on de personal en la industria maquiladora de exportaci´on. En: S. Gonz´alez, O. Ruiz, L. Velasco & O. Woo (Comps.), Mujeres, Migraci´on y Maquila en la Frontera Norte (pp. 133–165). Carrillo, J., & Hern´andez, A. (1985). Mujeres fronterizas en la industria maquiladora. Consejo Nacional para la Cultura y las Artes. Castel, R. (1995). La metamorfosis de la cuesti´on social. Una cr´onica del salariado. Paid´os. Castells, M. (2000). The rise of the network society. Blackwell. Colef (2002). Encuesta Aprendizaje tecnol´ogico y escalamiento industrial en plantas maquiladoras. El Colegio de la Frontera Norte. Proyecto Conacyt 36947-s, Tijuana, BC: Colef/Facultad Latinoamericana de Ciencias Sociales/Universidad Aut´onoma Metropolitana.

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Contreras, O. (2001). Empresas globales, actores locales: Producci´on flexible y aprendizaje industrial en las maquiladoras. M´exico: El Colegio de M´exico. Crouch, C., Finegold, D., & Sako, M. (1999). Are skills the answer? The political economy of skill creation in advanced industrial countries. New York: Oxford University Press. De la Garza, E. (2000). La contrataci´on colectiva. En: Graciela, Bensus´an & Teresa, Rend´on (Coords.), Trabajo y Trabajadores en el M´exico Contempor´aneo. M´exico: Miguel Angel Porr´ua Ed. Dini, M. (1996). Pol´ıticas p´ublicas para el desarrollo de redes de empresas. La experiencia chilena. Revista Latinoamericana de Estudios del Trabajo, 3(2). Dussel Peters, E. (2003). Ser maquila o no ser maquila, es esa la pregunta? Comercio Exterior, 4(53). Dutr´enit Gabriela, Vera-Cruz Alexander y Gil Jos´e (2003). Derramas de la maquila y capacidades tecnol´ogicas y empresariales de las pymes proveedoras. X Seminario Latino-Iberoamericano de gesti´on tecnol´ogica. Conocimiento, innovaci´on y competitividad: Los desaf´ıos de la globalizaci´on. 22 al 24 de octubre, M´exico, DF: ALTEC. Fern´andez-Kelly, M. P. (1983). For we are sold me and my people. Women and industry in Mexico’s frontier. New York: State University Press. Florida, R. (2000). The learning regi´on. In: J. Z. Acs (Ed.), Regional Innovation, Knowledge and Global Change (pp. 231–239). London: Pinter. Gonz´alez-Ar´echiga, B., & Ram´ırez, J. C. (1990). Subcontrataci´on y empresas transnacionales. M´exico: COLEF/Fundaci´on Friedrich Ebert. Hualde, A. (1995). T´ecnicos e ingenieros en la industria maquiladora fronteriza: su rol como agentes innovadores. In: M. Gallart (Coord.), El trabajo a fin de siglo, Cuadernos de Trabajo 4. Buenos Aires: Red Latinoamericana de Educaci´on y Trabajo, CIID-CENEP. Hualde, A. (1997). Las maquiladoras en M´exico a fin de siglo. Cuaderno de Trabajo del Seminario subregional Tripartito sobre aspectos sociales y laborales de las zonas francas industriales de exportaci´on, San Jos´e de Costa Rica: International Labor Organization. Hualde, A. (1999). Saberes productivos y polarizaci´on en la frontera norte de Mexico. Sociolog´ıa del Trabajo, 37, 59–86. Hualde, A. (2001). Del territorio a la empresa: Conocimientos productivos entre los ingenieros del Norte de M´exico. Regi´on y Sociedad, 21. El Colegio de Sonora. Hualde, A. (2002). Todos los rostros de la industrializaci´on:precariedad y profesionalizaci´on en la maquiladora de Tijuana. En Mar´ıa Eugenia, de la O y Cirila. Hualde, A., & Mercado, A. (1996). Al sur de California, industrializaci´on sin empresarios. Revista Latinoamericana Estudios del Trabajo, 3. Kourous, G. (1998). La salud y la seguridad laboral en las maquiladoras. Borderlines, 47(6–6). www.zianet.com/irc/bordline. Labarca, G. (1999). Formaci´on para el trabajo: observaciones en Am´erica Latina y el Caribe. En: G. Labarca (Coord.), Formaci´on y empresa. Montevideo: OIT/CINTERFOR/CEPAL. Mart´ın, R. (2001). Local labor markets: Their nature, performance and regulation. The Oxford Handbook of Economic Geography. Oxford University Press. Nonaka, I., & Hirotaka, T. (1995). The knowledge-creating company. Oxford University Press. Pollert, A. (1994 [1991]). La ortodoxia de la flexibilidad. En ¿Adi´os a la flexibilidad? Madrid: Centro de Publicaciones Ministerio de Trabajo y Seguridad Social. Quintero (1997). Restructuraci´on sindical en la frontera norte. El caso de la industria maquiladora. Tijuana, Baja California: El Colegio de la Frontera Norte. Quintero (2001). Cambios productivos y condiciones laborales. La experiencia de Deltr´onicos Operations-Delphi. En Memoria del IX Encuentro de la Asociaci´on de Historia Econ´omica del

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Norte de M´exico (pp. 41–55). M´exico: UABC Sur/Secretar´ıa de Educaci´on P´ublica/ Asociaci´on de Historia Econ´omica del Norte de M´exico. Rodr´ıguez, Vargas, M. (2002). Concentraci´on industrial y desigualdad salarial en el sector manufacturero mexicano. Tesis de Maestr´ıa en Econom´ıa Aplicada, El Colegio de la Frontera Norte, Tijuana, Baja California. Sorge, A. (1987). Implicaciones para el trabajo y la formaci´on en la f´abrica del futuro. Sociolog´ıa del trabajo, 1, 175–187. Storper, M. (1997). The regional world. New York: Guilford Press. Zarifian, P. (2001). Le modele de la competence. Paris: Editions Liaisons.

PRIVATIZATION AND DEREGULATION OF TELECOMMUNICATIONS IN BRAZIL: THE GLOBAL INFLUENCE AND LOCAL IMPLICATIONS Sonia Guimar˜aes Larangeira ABSTRACT The article discusses aspects of the process of privatization/deregulation/ restructuring as part of a global phenomenon in the telecommunications industry, considering the case of Brazil. The objective is to analyze the local implications of that global process focusing on its effects on the unions. The article examines the unions’ new strategies and agendas facing the dramatic changes in the industry. Some evidences indicate that the unions were negatively affected by the changes but despite the losses, the new situation forced a reaction and new strategies are being carried out although it seems difficult to re-gain the previous influence. The argument asserts that the global-local relations cannot be examined from a unilateral dimension, instead must be seen as a dialectical movement.

INTRODUCTION Telecommunications is an important part of the so-called information technology revolution, an indispensable support for the informational society and the new Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 75–98 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13005-7

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economy. As Castells (1997, p. 52), asserts “The availability of new telecommunication networks and information systems prepared the ground for the global integration of financial markets and the segmented articulation of production . . .,” contributing thus decisively for deepening the process of globalization giving it a distinct character. Therefore, information and communications technology, globalization and deregulation/liberalization/privatization1 of telecommunications can be seen as intertwined phenomena. It is difficult to think of one without the others. Technological changes in the industry accelerated in the last decades shifting from analogical towards digital system and with the use of satellite transmission. As a consequence, the industry has changed its nature, philosophy and content. Digitalization allowed for a new range of services which several firms were ready to provide to an unattended demand mainly from business corporations. The break-up of national monopolies (a tradition in the industry) became unavoidable. The break-up of telecommunication monopolies started in the United States, and was followed by Great Britain where the state monopoly British Telecom was privatized in 1984. The American and British experiences were repeated, in different ways, by other countries in Europe, Asia and Latin America. Despite being a worldwide trend, the nature, the motivation and the arrangements of that process were different in each situation. As Katz and Darbishire assert: “countries differ in the extent to which they are open to international competition and the extent to which international competition emerged as a new source of pressure” (Katz & Darbishire, 2000, p. 4). Therefore, although strongly conditioned by technolgical revolution, the path followed by each country for opening up services to competition and globalization was also influenced by social, political and economic factors. This article deals with the relationship between restructuring of the telecommunication industry globally and its local implications considering the Brazilian case and focusing on unions, a local actor whose previous strength and influence were relevant. The argument is that the evolving of new global-local relations can be traumatic for local agents, not only to the uncontrollable intensity and speed of the changes, the complexity of technologies originated abroad, the unbalanced relations between the agents, but also because the global process shakes consolidated relations and local ideological identities. Despite losses, the argument follows, local agents tend to develop strategies to adjust favorably to the new environment. This can be a difficult task since it implies acting within a new logic. This includes not only new actors and rules but also new concepts; for instance, ideas as stability, permanence, homogeneity, autonomy, sovereignty are replaced by instability, contingency, dependence and complexity (the two sets of concepts do

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not necessarily correspond to good and evil). The challenge facing local actors is to build an effective new course of action which takes into account a new environment and system of relations. The agents’ powerbase will depend on several factors: institutional elements – i.e. the model of deregulation and privatization – technological know-how as well as symbolic aspects – i.e. to be able to revise concepts that are deeply rooted in economic and political aspects of social life. The data presented are based on research carried out with the country’s telecommunication unions (in Rio de Janeiro, Sao Paulo, Minas Gerais and Rio Grande do Sul). The main data are drawn from collective agreements signed by the unions and the incumbent companies as well as from interviews with the unions’ leadership. Data were also drawn from secondary sources, i.e. companies annual reports, unions reports and bulletins. In the case of the incumbent operator CRT (in the State of Rio Grande do Sul where privatization preceded by 18 months the national one) a comparison is made between the periods prior and post privatization. The article is divided into two main parts. Firstly, a brief overview of the subject is presented, starting with some basic theoretical issues, the industry’s transformation as well as its current structure. Secondly, the empirical data highlighting the implications for the unions is analyzed.

GLOBALIZATION AND TELECOMMUNICATIONS Globalization is a difficult notion to work with: it is a controversial concept, with different meanings (or discourses, as Therborn, 2000, suggests); it can be applied to different dimensions of society – economical, political, social and cultural – and carries strong political and ideological connotations.2 The debate on globalization has mobilized a great deal of arguments and energy from social scientists and, at the risk of simplification, it could be briefly summarized in terms of a dual perspective: (a) arguments trying to show that the phenomenon would not be qualitatively distinct from the already existent forms of capitalist expansion (Hirst & Thompson, 1998); and (b) arguments trying to demonstrate that the phenomenon would constitute a descontinuity vis-`a-vis prior forms of international relations and exchange (Castells, 1997). For Hirst and Thompson, the concept of globalization is not but a myth; although acknowledging the presence of significant and distinctive changes in the world economy, they do not agree that those changes are sufficient to shape a new type of economic system and that the current level of openness, interdependence and integration of national economies, is unprecedented or different from what existed at the beginning of the 20th century. For them, globalization is a new face for the

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old phenomenon of imperialism. The main point of the argument is to reject the idea that global markets are uncontrollable and impose limits on national actors. In opposition, Castells regards current changes in the world economy as revolutionary, emphasizing the role of information and communication technologies as fundamental in the expansion of the global economy.3 Castells makes a clear distinction between worldwide capital accumulation (existent since the 16th century), or world economy and the “capacity to work as a unit in real time on a planetary scale,” what he calls global economy (Castells, 1997, p. 92). According to some analysts, the 1970s crisis threatened capitalism and forced a pragmatic restructuring of the system which imposed economic discipline on western countries, at times to the detriment of their own national economic policies. As a consequence, a growing interdependence among economies, especially in terms of capital markets and currencies, has emerged. The role of the state would not necessarily be reduced, to the contrary, it would endeavor to create favorable conditions for the country’s economic integration in the international arena (Castells, 1997, pp. 86–87). All those ideas are well known and it is unnecessary to enter into further details. It is sufficient to point out that the focus of the discussion shifted: less was the concern with the threats imposed by the global system to a country’s economic and political autonomy or with the decision whether a country should or not participate in the global system; more, instead, was the concern on how to be integrated and benefit from it. Indeed, competition became the driving force in the productive process, worldwide. The search for new markets forced national agents to comply with the international economic rules and actors. The loss of autonomy affected all countries; however, it did not mean their bargaining power in the international arena would ultimately be equal. Therefore, in the analysis of global-local relations what is at stake is not a space dimension but a power dimension. This does not necessarily imply a unilateral movement, as frequently advocated. Power relations condition the results, but the movement is always dialectical: the subordinate agents tend to react and to create alternatives which may turn into opportunities. In this sense, globalization began to be seen not just as annihilating local capabilities but also as a potential enabling force. Analysts want to know the way local agents react to the new environment dominated by greater mobility of capital and of multinational firms which, in search for comparative advantages, submit local agents to rapid and unexpected changes. Restructuring and privatization in telecommunications illustrate that process, exemplarly, especially taking the case of Brazil, where the telecom monopoly enjoyed great autonomy even vis-`a-vis the state, whose main interference was to appoint the executive board and where the union used to have a comfortable

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situation. That reality changed dramatically with the new global environment of which privatization is a consequence. Before examining the empirical case, it is important to present some general aspects regarding the telecommunication industry and its new profile. As stated above, the industry operated worldwide in the form of national monopolies until mid 1980s, justified by technical and economic reasons. The industry was known by the average good working conditions when compared with the labor market in general, offering employment security, higher wages, skilling, career mobility and fringe benefits based on seniority. This sort of “privileges” were largely the result of the unions’ strength and influence in the industry. Restructuring meant a deep change in the industry’s identity and structure: as a service of public utility telecom, was characterized worldwide by its monopoly and national character and by the fixed-line telephone services. With restructuring the industry became private, competitive and global, changing from telecommunication to information industry, from wireline to wireless, from voice transmission to data traffic.4 Usually, one thinks of telecommunications as related to voice transmission, however, the industry is now much broader, including: (a) internet-based services (e-mail, web browsing; web hosting, instant messaging); (b) data networks and transportation (i.e. electronic data interchange, EDI, largely used in e-commerce); (c) 3rd generation mobile communication of which can transmit data-based networks; and (d) voice transport over data network. The industry changed its profile: considering the period 1990–1999, in the U.S., voice transmission shrunk from a share of 97% of the industry to 70%; meanwhile, wireless network grew from 3 to 17% and internet and data transmission, non-existent at the start of the period, reached 13%. The changing structure of the industry is followed by changes in the size, technical and professional profile of the workforce: the workforce is now spread out in countless small, medium and large multinational companies (this is also true for the U.S.). It also used to be mainly craft technicians, whilst now it includes an increasing number of salespeople, computer programers and software specialists. The number of manager and executive positions has also increased (Batt et al., 1999, p. 4).

THE BRAZILIAN CASE As stated above, restructuring in telecommunications is a worldwide phenomenon; however, the nature, motivation and the social implications of the process can be

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very different in each country. In the U.S. and Great Britain, it started from internal pressures coming mainly from large multinational corporations, in search for more efficient and diversified services.5 In “peripheral” countries like Latin American ones, where telecommunication monopolies were, in general, either owned or controled by the State, the need for restructuring came from the governments’ lack of financing which increased since mid-1970s, worsening in the 1980s. In Brazil, the level of investment in the sector went down from U.S.$3.5 billion in the period 1973–1979 to U.S.$2.4 billion in the period 1980–1989. Restructuring in those countries took a defensive character fostering political controversy, since it involved a total or partial transfer of public ownership to private, often foreign, groups. The opposition saw the privatization of state monopolies as an offence to national sovereignty. State participation in telecom, in Brazil had started in 1962, when the Brazilian Code of Telecommunications was issued establishing government control over telecom services. The state long-distance carrier, Embratel, was created in 1965 and the Telecommunications Ministry, in 1967. In 1972, Telebr´as, the state holding, was created to complete the Brazilian System of Telecommunications formed by: (a) 24 local state companies; (b) Embratel, the long-distance carrier, and (c) the Center for Research and Development (Centro de Pesquisa e Desenvolvimento, CPqD). The creation of Telebr´as System illustrates well the historical period marked by statism and developmentalism. The creation of CPqD shows the determination of achieving technological autonomy under the import-substitution industrial policy. During the 1970s, Telebr´as expanded very fast. In the 1980s, an increase in the rate of inflation forced price control of public services. This limited the expansion of new technologies and the supply of more complex services. Telebr´as performance during the 1990s was poor: low tele density; low quality and productivity. In reality, it was not responsive neither to market revenues nor to consumer needs and it was often the center of political disputes aiming at controling of bureaucratic positions (Albuquerque et al., 1999). Telebr´as was privatized in July of 1998. It was not an easy process since it implied a change in society’s deeply rooted vision of the state as a supplier of basic services, such as telecommunications. The process started in 1995, restricted to mobile telephony, satellite transmission and to some added value network services. The complete privatization, as mentioned above, ended in 1998 (almost a decade later than in Mexico and Argentina), accomplishing something unthinkable five years earlier. At that time, Telebr´as was the largest telecommunications system in Latin America and the 11th in the world. The adopted model followed the American one. It was essentially a duopoly system: (a) The incumbent operators (former Telebr´as companies), would run

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as a public service, bound by universal quality targets imposed by the National Regulatory Agency (ANATEL); and (b) the new entrants free from obligations imposed to the formers as well as from the burden of the old bureaucracies, but lacking a captive market. The model is also known as statutory regulation in which an independent regulatory agency, managed by an executive board with a fixed and stable mandate, is responsible for the industry regulation and control. The process of privatization imposed no restrictions on foreign capital participation, differently from what occurred in Mexico. The choice of this model was not without disputes. The opposition, including Leftist and Nationalist parties and intellectuals as well as the workers’ movement, had two proposals: either the maintenance and modernization of the public monopoly, close to the so-called European model (France, Germany and Spain) or the creation of a private national monopoly. The proposal for the creation of a public monopoly was particularly dear to the unions. They acknowledged the need for opening up services to competition in the present stage of technological change and capital mobility, but they wanted to preserve the country’s autonomy over a basic infra-structural area like telecommunication, through the creation of a national operator, Brasil Telecom, following the example of France Telecom and Deutsche Telekom. For the Nationalist, the creation of a national monopoly would allow for the development of a strong domestic base for the production of equipments and softwares as well as a global operator (Coutinho, Luciano. Um projeto para as telecomunicac¸o˜ es, Folha de S˜ao Paulo, 05.11.1997, cited by de Almeida, 2000, p. 20). The government’s choice, however, as in many other Latin American countries, was bound by economic pressure, mainly lack of long-term financing and by lack of expertize on information technology. The sale of the telecommunication plataform to foreign operators would allow them to capture scarce resources to finance their debt as well as promote integration of the local-global markets. This would explain “the absence of restrictions for foreign capital participation in the privatization process of telecommunications . . .” in most of Latin America countries, with few exceptions as in Mexico (Wohlers, 1999, p. 71). The privatization of Telebr´as raised U.S.$19 billion or 51.3% of the national privatization program proceeds by the end of 1999 (de Almeida, 2000, p. 1). The telecommunications landscape in Brazil has changed profoundly since. Tele density for fixed telephones in 1990 was 7.1; by the end of 2001, it had increased four times, reaching 28.2 (PASTE, ANATEL, 2000, 2002). The same occurred with mobile telephony: tele density increased remarkably, going from 4.5, in 1998 to 9.1, in the following year and to 20.5 in 2002 (some states as Rio Grande do Sul and Bras´ılia have higher tele density, 32.0 and 54.0,

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respectively, April/2003) (PASTE, ANATEL, 2000; ANATEL, www.anatel.gov.br, 2002, 2003). Productivity achievements in the industry have been impressive. Work productivity (lines in service by employee) saw records increases in all companies, from large plants and from smaller workforce. In the following section, is an analysis of the implications for local unions of the process of privatization and restructuring led by multinational firms.

IMPLICATIONS ON UNIONS Telecommunications unions used to have, worldwide, high influence in the labormanagement relationship. Changes in the telecom industry affected their role, although in different ways, depending on the regulatory model adopted, as well as the role unions had managed to play in the process. However, despite dissimilarities in the short-run, in the long-run the trend would suggest a greater convergence considering the new structure of the industry and workforce. Mexico, Argentina and Uruguay in Latin America, and Germany in Europe, make good examples to illustrate the statement above. In Mexico, the privatization of public monopoly Telmex occurred in 1990, through a process of management-union partnership based on negotiation and mutual benefits. Management-union joint commissions, existent prior to privatization, remained along with new ones which were created to carry out bilateral decision-making on areas such as productivity, quality, training and work conditions. The Telmex restructuring gave way to greater work flexibility, job positions consolidation and early retirement. Downsizing as a policy was avoided and, instead, replaced by relocation, re-assignement and re-training (de la Garza & Herrera, 1997). The labor-management relations replaced conflict for collaboration and a mutual gains perspective. This outcome had to do with changes in the political system entailed by an union-government alliance. As the process continued and new firms did not follow the Telmex model at the industrial relations level, a threat arises that the high road strategy would not be sustainable in the long run. In Argentina, privatization of telecom occurred in 1990, and could be taken as the opposite example to the Mexican: the system was sold to foreign operators and restructuring was based on indiscriminated downsizing. The union was excluded from any interference in the process and its actions were restricted to defensive ex post responses (Walter, 1998, p. 100). In Uruguay, to the contrary, there was restructuring without formal privatization. The union successfully mobilized the population to vote against it in the

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1992 plebiscite. Despite the absence of privatization, there was an increase in outsourcing (“peripheral privatization”) contributing to an increase in productivity and tele density. Global influence was still strong as the public operator had to deal with foreign equipment suppliers and to use external technical assistance for the modernization of its HR management (Walter, 1998, p. 94). Concerning the European experience, it is worth mentioning the case of Deutsche Telekom, the German public monopoly, where the process of privatization was gradual, beginning in 1989 to end in 1998. The union, Deutsche Postgewerkschaft (DPG), participated in the process and maintained its presence even after privatization influencing the pace and nature of the liberalization process and imposing limits on managerial decisions. The management-union relationship was based on cooperation and mutual gains. Restructuring was based on high-road strategies, although not excluding measures as work rationalization, employment diversification and flexible payment systems, contingent employment, company segmentation, decentralization of decision-making and collective bargaining. The union suffered a decline in membership although smaller than in other countries; it also faced a shift in the balance of power vis-`a-vis works councils which gained influence to the detriment of the union (Ferner & Terry, 1997, in: Katz, 1997; Katz & Darbishire, 2000, pp. 208–210). Nevertheless, work reorganization at Telekom got negotiated on a bilateral basis: subsidiaries were bound to negotiate collective agreements with the union; Telekom agreed to adopt a code of conduct in its global partnership. Institutional factors have been an important element in defining labor’s position in the new context. In Germany, legislation grants works councils the right of collective representation barring companies’ attempt to implement managerial individualistic strategies. In addition, the regulatory model ultimately favored Telekom’s position in the market reducing harsh competitive pressures: the operator maintained control over the cable TV company, the largest in the world (Batt & Darbishire, 1997, p. 75). Despite DPG significant influence in the restructuring process, analysts pointed out that decentralization and variability are emerging and those new factors could impair DPG’s achievements (Katz & Darbishire, 2000, p. 214). The examples above suggest that whilst implications for the unions over restructuring are not the same, in the long-run, as the process develops, it might present greater convergence. In Brazil, unions were greatly affected by the restructuring/privatization process, whose model they strongly opposed and whose implementation they were alienated by. The union movement (the telecom unions, in particular) and the government were openly in conflict: the government was accused of damaging the country’s and workers’ interests in favour of international financing.

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For unions, the main set-back was the change from a state monopoly into an industry made up of several small and medium size firms along with large multinational companies, many of them either openly or subtly anti-union, operating in an unregulated market. The fairly homogeneous industry where collective bargaining used to be centralized was transformed into a fragmented and heterogeneous sector, impairing unions’ influence either in terms of collective bargaining or membership, since it became extremely difficult to recruit workers now geographically dispersed. Other forms of diversity confronted union actions geared till then by ideas of homogeneity, collectivity, equality. Diversity emerged in employment and labor practices, not only among companies, but within the same company and within occupational groups. Call centers are clear examples, resulting from customer segmentation and driven by market strata. Remuneration became highly differentiated defined by individual performance discouraging workers from joining unions. The industry now includes new occupations, as employees in call centers or in mobile telephony. Many of these workers are skilled, enjoying better working conditions, focused on professional achievements. Not infrequently these employees have in mind negative stereotypes of unions and are unwilling to join them. Traditionally, in Brazil, negotiations were for the whole workforce, guaranteeing uniformity (i.e. in dates, in the percentage of wage increases) for different groups of workers. Negotiations are now held locally, which increases the diversity of results (see Table 2). The National Federation (Fittel) became weak and a national reference was lost. Decentralization and a variety of results have been the norm, becoming a factor of imbalance and weakness for unions. The phenomenon of fragmentation/diversification occurs in Brazil as it happens in other countries through segmentation of the labor market. It makes it very hard for unions to communicate with and organize such scattered and diverse workforce. According to a union leader, segmentation causes problems in organizing workers for an agenda, which cannot be the same for all segments for language and approach, which have to fit each group distinctly: “It is not possible to treat in the same way workers from cellular telephone companies and the ones from sub contractors.” As Sennett points out “Routinized time had become an arena in which workers could assert their own demands, an arena of empowerment” (Sennett, 1998, p. 43). Besides decentralization, other obstacles emerge, for instance, how to define the interlocutor, since new companies are consortia controled by foreign groups formed in turn by several partners, which are quite heterogeneous, making it difficult to acknowledge the group’s identity and, consequently, anticipate management orientation and planning strategies. The most important carrier in

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Brazil is the corporation Telef´onica Internacional de Espa˜na which held the control of Rio Grande do Sul fixed telephone company (CRT), up to February 2000, and is now controling S˜ao Paulo’s fixed line business as well as mobile telephone companies in Rio de Janeiro and Rio Grande do Sul. It was privatized in 1997 and holds the monopoly of telecommunications in Spain. Fifty-two percent of its shares are not Spanish capital (40% is from U.S.). Of the remaining 48%, Spanish banks hold 20%, ordinary share holders 20% and institutional Spanish investors 8%. Telef´onica chose the Latin-American market as its main focus of investment. It is the major foreign investor and the second largest private group in Brazil. Telefonica ranked 7th among the most valued telecommunications companies in the world; 58.1% of its revenue come from abroad (OCDE, 2001). The group’s strengthening would rest on the expansion of its Brazil business, the largest market in the region with an impressive non-satisfied demand. Growth remains a priority for large corporations, since it is estimated that the telephone market in the next 10 years, would not have more than six large operators worldwide. MCIWorldCom, which acquired Embratel, (ranked 13th among the most valued telecommunications companies), was the subject of a seminar organized by the unions in Brazil to learn the structure and composition of the company in order to define a more suitable action. Brasil Telecom, which acquired CRT after Telefonica moved out, is controled by Solpart, which holds 51.8% of its shares, whose controllers are Timepart, with 51%, a group formed by investment funds commanded by Banco Opportunity, Stet with 38%, controled by Telecom Italia and Techold with 11%, an association of Brazilian pension groups and Banco Opportunity. As the industry is not yet consolidated, changes in ownership are expected. Besides, conflicts between partners create uncertainties regarding who is the interlocutor and what are their strategies. The National Regulating Agency (ANATEL), which could provide some directions, was created after the privatization and is not entirely structured yet. The collective bargaining process demands, especially in an adverse and changable conjuncture, a careful definition of the agenda’s priorities, as well as who are the mediators and/or institutions/associations, if any, and what the pace of negotiation is going to be, in order to decide which kind of mobilization and actions are to develop. Regarding gains sharing (Profit and Results Sharing Plan, PRSP), for instance, it is necessary to know when is the right time for negotiation (before or after the publishing of companies’ results?). It becomes strategic to learn how to negotiate in the private environment without the state “shelter.” The past experience was rather different, even if not free of conflict, the negotiations used to end up in Congress or in the Ministry, helped by the influence of politicians and other government agents. Negotiations with world giant companies with different managerial culture turned up to be a real challenge for the unions.

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Restructuring in the incumbent companies meant also downsizing, which is likely to continue despite expansion of the services, since companies have to continously increase productivity in order to offset the high investments made. Retirements, voluntary and involuntary lay offs persist (from 1999 to 2002, Brasil Telecom has reduced its workforce by 80% and Telefonica by 49%, while Telemar and Embratel both increased the number of employees by 17%). At the same time, there was a pulverization of the workforce, employed in small subcontracted firms and/or in areas other than telecom (i.e. telemarketing), workers can be recruited by other unions, as for instance in cable maintenance, where they can be affiliated to the construction unions. All unions with profiles and activities but rather different from the telecom unions. As a result telecom unions have been experiencing a decrease in membership. According to a union leader, in two years, telecom unions lost, on average, 40% of their income. The financial situation of these unions can worsen if the companies reduce even more the number of full-time paid union representatives or stop then at all, as might happen. The difficulties in recruiting new members are also related to the fact that large part of the workforce is formed by young people, with higher levels of education, distant from a union background and not willing to stay in the industry, as employees in call centers. Unions loose their appeal as a representative forum for some groups of workers. Companies on their turn try to restrict unions’ activities in the workplace. On the other hand, unions seem reluctant to break-up with the state unionism culture to implement a renovation through new strategies. Problems also derive from adverse conditions such as the unions’ shortage of financial resources, lack of skills to deal with a new context, as well as workers’ fears of being fired. The analysis of collective agreements shows: (a) the losses after privatization; and (b) the variability of results comparing the main operators. The example of the local incumbent company, Companhia Riograndense de Telecomunica¸co˜ es (CRT), today Brasil Telecom, the first Brazilian telephone company to be privatized (December of 1996), allows to compare the content of collective agreements signed by the company and the union before and after privatization (see Table 1).6 Concerning remuneration, before privatization, salary increases were annual and linear, according to the variation in the inflation rate. Fringe benefits, as seniority-based benefit (1% of the salary by each worked year), annual holiday benefit (70% of the basic salary), were incorporated in the salary. Preparing for privatization, the company started to cut off some of the above mentioned benefits: productivity gains went down to 2% (not incorporated in the salary) in the 1995–1996 agreement, to disappear as a separate clause; after privatization, productivity gains is negotiated under the Profit and Results Sharing Plan (PRSP)

Item

Period 1994–1995

1995–1996

1996–1997

1997–1998

1999–2000

2001/2002

Variation according to official rate of inflation

Maintained

10.8% (above rate of inflation) Includes productivity

1.5% (below rate of inflation)

Bonus: R$917 + 26% salary

Productivity

5% of wages after increases

Included in the wage increased

Eliminated

Eliminated

Profits/Results Sharing Program

–

2% of wage; not incorporated in wages –

Up to R$6,000, 6%. Above R$6,000, 4%. Incorporated in the salary. Bonus R$825 to all Eliminated

–

–

80% sal. + 20% fixed R$1,200 according to targets

Annual bonus

Additional for seniority (1% of wage) 70% of wage

Maintained

Maintained

Maintained

Eliminated

Maintained

Maintained

Maintained

According to Legislation

Maintained

Maintained

Maintained

Maintained

Maintained

Maintained

Remuneration Wage increase

Vacation bonus Employment Working hours

87

36 hrs employees working w/audio phone and video. 40 hrs to all

80% sal. + 20% fixed. Limit: 1.2 salary Targets reached: 1.8 salary to all

Privatization and Deregulation of Telecommunications in Brazil

Table 1. Collective Agreements: CRT/Brasil Telecom (1994–2002).

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Table 1. (Continued ) Item

Period 1995–1996

1996–1997

1997–1998

1999–2000

2001/2002

Maintained

50% according to legislation

Maintained

Maintained

Maintained

New technology: Training/ relocatation

50% for 2 first hours; 100% for subsequent hrs. No lay off due introd. NT; training & relocation

Training and relocation for employees hit by NT

Maintained

Maintained

Maintained

Subcontracting/ Outsourcing

Will Reduce gradually

Maintained

Maintained

Maintained

Training program; professional development to employees hit by NT/automation Eliminated

Eliminated

Communication of criteria to all employees

Maintained

Maintained

Maintained

Eliminated

Eliminated

All workers in the board of union and federation Union & company: consulation & decision making

Maintained

Maintained

Maintained

Up to 12 employees

Eliminated

Eliminated

Eliminated

Union & company aiming at negotiating conflicts

Maintained. Will be reviewed in future Eliminated

Overtime hours

Management Perform/ promotion/ evaluation Industrial relations Full time paid representatives Commissions

Source: Collective agreements signed between the Union and the regional incumbent company, CRT/Brasil Telecom.

˜ SONIA GUIMARAES LARANGEIRA

1994–1995

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and concession of seniority-based benefit eliminated. The vacation benefit went down from 70 to 34% of the wage according to the Legislation. Salary increases stopped varying according to inflation rates and lost the linear character; instead, concession of bonuses according to targets, was implemented. In the 2000–2001 agreement, there was improvement in gains (wage increases were incorporated into the salary along with bonuses), possibly a result of pressures from the labor market couple with eagerness to accomplish targets imposed by ANATEL so as to be awarded the company certification to extend services. The agreement on PRSP (Profit and Results Sharing Plan) was negotiated in 2000 and by union’s choice, focused on results, not profits. The terms of the agreement favored workers in some aspects (see Table 1): the basic value to be distributed (annual payment) was 1.2 of the remuneration, 20% being a fixed part, and 80% proportional to the wage of each employee. An advanced payment of R$1,200 (around U.S.$400) would be granted if targets were fulfiled earlier. It was also agreed that all employees would receive a bonus of R$917 (about U.S.$350) plus 26% of the wage of each employee. The amount paid as variable remuneration (productivity sharing and bonuses) was monetarily significant considering the labor market as a whole. The changes mentioned above introduced a significant variable component in the remuneration in telecom industry. Through this mechanism companies try to face constant technological changes and fierce competition, by attempting to get workers’ involved with the company’s goals. In the 2001 agreement, productivity gains are conditioned to the accomplishment of targets. The clause is very strict and it is stated as a clear threat: if the targets are not totally achieved, the agreement is nullified. . . . if the Company does not get the certification from ANATEL, nothing will be paid . . . even though the Company had achieved the targets (Collective Agreement PRPS, 2001, clause 1st, p. 2).

Despite their contingent character, gains such as profit/results sharing and bonuses turn out to be positive for the workers given the low wage environment. However, the gains based on results and profits became a means of transferring the risks from the firm to the workers without transferring, in the same degree, decision-making prerogative. Concerning agreements on results sharing, more important than monetary gains was the possibility for union to have access to the company’s data, a prerogative not allowed even under the state management (de Carvalho Neto, 1998, p. 169). The setting up of a joint commission for establishing rules and criteria to implement the Results Sharing Plan, acknowledged the union as an interlocutor capable of influencing the choice of indicators for measuring results.

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Regarding working conditions, the reduction in working hours without wage reduction (36 hours weekly to employees working with audio-phones and videos and 40 hours to all others) was maintained after privatization. Regarding overtime hours, there was a 50% reduction in the value paid for the extra hours worked subsequently after the first two; there is no reference to restrictions or prohibition of overtime hours. Unions want to increase the value of overtime hours as a way of restricting or abolishing this practice in favor of admission to new employees. Regarding lay offs, the clause “no lay off for employees hit by new technologies” was eliminated in the 1995–1996 agreement; instead, there was a commitment to provide qualification and relocation programs for those workers. The latter is replaced by the commitment to provide “programs of skilling and professional development.” The clauses “reduction of subcontracting” and “communication of procedures on evaluation and criteria for promotion,” were eliminated from 1998 on, despite an increase in subcontrating after privatization. Regarding health and safety at the workplace, there were no changes. However, there is no reference to regulation concerning the workload, an essential aspect of the work process, after privatization. With respect to industrial relations, the number of full-time paid union representatives was reduced. The last agreement had stated that such a prerogative would be re-examined in the future, indicating a trend of reducing the number of these representatives, as had happened with other unions in the industry (see Table 2). The reduction in number of full-time paid representatives would hit unions strongly, since they would need personnel to deal with new and diverse situations whilst resources would get more and more scarce. Analyzing comparatively recent agreements signed by three unions and their respective carriers, there is evidence of convergence, but also some important divergence. Concerning convergence, one observes that linear wage increases were replaced by flexible forms of remuneration. Benefits such as wage increases according to rate of inflation, annual wage increase by years of work, vacation bonus, value of overtime hours above legislation, were eliminated. Productivity would be negotiated under the Profits and Results Sharing Program and would not be incorporated in the wages in all cases, although the forms, criteria and amounts negotiated would differ in each case. Another aspect of convergence is the elimination of clauses limiting subcontracting, despite being a great concern for telecom unions. Clauses guaranteeing workers information on criteria used for performance and promotion evaluation were also eliminated. A reduction in working hours without wage reduction was maintained in all cases.

Item

Period CRT

TELEMAR

Subcontr.

1999–2000

2001–2002

MG-2000

MG-2001

RJ-2000

RJ-2001

2000a

2001b

Bonus: R$917 + 26% salary

Up to R$6,000, 6%; above R$6,000, 4%, incorporated in the salary; bonus R$825 to all

Up to R$1,700, 2% incorporated in the salary; above R$1,700, no increase

Up to R$1,700, 2% incorporated in the salary; above $1,700, no increase

Up to R$1,500, 3%; above R$1,500, no increase

Minimum wages according to functions

Profits/ Results Sharing Program

80% sal. + 20% R$1,200 accord. targets

80% sal. + 20%, up to 1.2 salary. If targets reached: 1.8 salary to all

Some rules but no agreements with the union

Up to R$1,500, 3%; above, R$1,500, no increase; bonus R$470 to all Promise of setting up agreement with the Union in 2002

–

–

If implemented, the Firm will inform the Union

Vacation bonus

Legislation

Legislation

Legislation

Legislation

Legislation

Legislation

Legislation

Increase in minimum wage for all functions in relation to previous agreement The Firm and the Union are expected to sign a PRSP agreement Legislation

36 hrs for operators + empl. w/audio & video; 40 hrs to all others

Maintained

36 hrs for operators + empl. w/audio & video; 40 hrs to all others

Maintained

36 hrs operators +empl. w/audio & video; 40 hrs to all others. It can return to 44 hrs weekly

36 hrs for operators +empl. w/audio & video; 40 hrs to all others

44 hrs weekly

44 hrs weekly

Remuneration Wage increase

Employment Working hours

Privatization and Deregulation of Telecommunications in Brazil

Table 2. Collective Agreements: Fixed Line Incumbents Operators and Subcontractors (1999–2002).

91

92

Table 2. (Continued ) Item

Period CRT

Overtime hours Bank of hours

NT/Training, relocation/ professional development

Commission

Subcontr.

2001–2002

MG-2000

MG-2001

RJ-2000

RJ-2001

2000a

2001b

Add 50% according Legislation –

Add 50% according Legislation –

Add 50% according Legislation –

Add 50% according Legislation In process of negotiation

Add 50% according Legislation Legislation

Add 50% according Legislation Legislation

Add 50% according Legislation –

Training & professional developt to empl. hit by NT/automation

Maintained

–

–

–

–

Add 50% according Legislation Negotiation may be held in the future –

Up to 12 full time paid union representat.

Maintained

Up to 6 full time paid union representat.

Maintained

Up to 7 full time paid union representat. and 4 not paid

Union + Company to settle collect/ind work conflicts

Maintained

–

–

–

Up to 7 full time paid union representatives and 2 not paid –

Source: Collective agreements signed between the Unions and the regional incumbent telecommunications companies and subcontractors. a In 2000, the agreement includes three subcontractors. b In 2001, the agreements were signed by each subcontractor, separately.

–

Up to 5 full time paid union representat.

Maintained

–

–

˜ SONIA GUIMARAES LARANGEIRA

Industrial relations Full time paid represents

TELEMAR

1999–2000

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Divergence appears at the remuneration level: in the union-Telemar/RJ and Telemar/MG agreements, there are different levels of increases according to the amount of salaries (2% for wages up to R$170,000 in 2000; 3% for wages up to R$1,500 in 2001; no increases to wages above those values). The unions oppose differentiation in wage increases for it hurts the ideas of homogeneity on which their strategies and actions are based. Indeed, variability is a concept they have difficulty in dealing with. In the cases examined, though, differentiation in wage increases might have contributed to a reduction in wage inequality. Comparing the three union-carriers agreements, one observes that the union-CRT equals the others for conceding differentiated wage increases; it differs by granting increases to all employees and in higher percentages than the others, to each group. This might express the particular situation of the company in need to achieve targets and pressed by the labor market in the region. Another divergence concerns programs for training and professional development of employees hit by new technology: this kind of clause is maintained only in the union-CRT agreement. The firm’s commitment to such a policy is the union’s merit since there is little disposition from the Brazilian management to invest in training programs and negotiate this kind of clause. Divergence is also found regarding the union-CRT joint commission to settle legal problems outside the Courts. Divergence occurs regarding the implementation of “bank of hours” set up by union-Telemar/RJ, a practice unionists disapprove as contrary to workers’ interests since it would mean overtime hours without monetary benefits. An aspect worth mentioning concerns the 2000 agreement signed by the union/RS and three subcontractors. Although limited in its range (basic legislation requirements) it becomes relevant for guaranteeing rights not enforced until then. Rights as registration of work contract; minimum wage according to functions and positions; maximum weekly working hours, payment of overtime hours; health and safety norms at the workplace; workers’ reimbursement of expenses with the use of their cars and telephones in working activities; permission for workers to see doctors during working hours; employment security for union representatives; meal bonuses, were guaranteed by the agreement. More significant than immediate gains is the union’s changing attitude, since for the first time, it was concerned with affiliating workers from subcontracted firms, who found themselves unprotected and excluded from telecom unions, rather than just the state monopoly employees. The content of the agreements examined illustrates: (a) the changes and losses faced by telecom unions in Brazil, resulting from globalization, technological innovation and privatization; and (b) the diversity of results emerging from collective bargaining which became decentralized. The correlation between globalization, technological innovation, privatization and negative implications

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for the unions seems significant; however, globalization, privatization and technological change functioned in fact as a catalyzing factor and they could not explain the whole phenomenon. In assessing the global-local relations, one has to consider internal factors as, for instance, the political dimension. As mentioned above, the implications for unions in Brazil was different from what occurred in Mexico and the main reason was the political context: in Mexico, unions benefited from the harmonious relationship they share with the government. In Brazil, on the contrary, unions were confronting the government and strongly opposed privatization. As a result, they were alienated from the process and after privatization they found themselves as outsiders. Telecom unions’ influent role prior to globalization/deregulation, to a great extent, came from the industry’s nature: a monopoly delivering a service of public utility, dependent on labor intensive activities. In Brazil, the unions’ position was comfortable: with a large and stable workforce under a sole system of employment; union-management relations were close to paternalism. The breakup of the monopoly brought a totally different environment: the main change was the shift from homogeneity towards diversity. Unions felt threatened not only for the unfriendly environment, but also for not being acquainted with variability. Perplex before such challenges, they tried to base their actions on new strategies although in a slow and defensive way. The main change was a shift in unions’ attitude towards management-union relations, seen from a dualist perspective – colaboration vs. antagonism – in which true unionism could only relate to the firm, boss or management in an antagonistic manner. Unions are pursuing now a more pragmatic policy based on the idea of negotiation. Diversity and competitiveness are forcing them to understand that there cannot be a priori ideas; action has to be considered in a continuum range of approaches, from cooperative to antagonistic, depending on the circumstances (Katz et al., 2002, p. 2). The agreement on the Profit and Results Sharing Plan (PRSP), after a strong opposition – “it represents a submission to capitalist principles” – is an example of the changing attitude. As a union leader stated: “Today, PRSP is the only thing that unifies the workforce, from top to bottom, since all employees are interested in that gain.” Participation in the Profit and Results Sharing Plan can favor workers if used as an opportunity to disclose the firm’s business achievements. Now that the employers are multinational firms as Telefonica de Espa˜na (operating in Brazil and several other countries in Latin America) and Telecom Italia Mobile, the unions are discussing if PRSP, that is, profits and results and their distribution, should also be considered in global terms. Therefore, if productivity and profit are part of the workers’ interests, unions could claim the right to intervene in the decision-making process.

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95

In Brazil, after privatization, unions acknowledged that they had to learn a different logic: in terms of negotiation, private firms could be faster than the state bureaucracy; regarding remuneration, it would be easier to negotiate variable payments in the form of bonuses, premium or rewards than fixed benefits. Negotiation, therefore, has to consider other kind of variables: instead of a linear percentage of wage increase, it has to discuss levels of productivity, efficiency and quality and their relation to the sort and amount of bonuses, premium or rewards; the target segments of the workforce; the criteria for concession. Collective bargaining becomes a more complex task; it demands new competences: not only political ability but also knowledge on firm’s economics. In terms of monetary gains, the unions also learned that large telecom multinationals are ready to finance cultural and social areas. Unions understood that they could use those resources for developing educational and cultural programs for workers and the community. Diversity in the industry made unions aware that they could not restrict their constituency to the workforce in main operators, instead, they should enlarge their representative scope considering the industry as a productive chain, from equipment suppliers to the outsourced and small subcontracted firms. They now acknowledge that mistakenly they had left aside other segments of the productive chain, as the contingent workers. As a union leader has stated: “we did not look at contingent workers since we did not want to legitimate this kind of work; however, we now see that they are the ones who need us most.” Facing the diversity of work situations in the industry, unions want to set up some minimum standards in terms of payment, rights and benefits in such a way that any employee entering the industry in any position would be entitled to them. In the new context of negotiation, they also want to discuss conditions concerning lay offs and subcontracting. The new strategies implemented by telecom unions in Brazil correspond to changes in a leadership whose concern is to be prepared to face the challenges of a new information industry. As a union leader asserted, comenting on the need for leadership renovation: “in the past, union leaders did not need to have special communication skills; today, it is a priority; they also need to know, besides other expected attitudes and values, how to decide and take initiative under pressure.” Communication is now considered crucial since, as they assert, they need to build and appeal to a new occupational category – the information employees. The unions are also learning that they should move from the offices to the workplace, where they have to dispute workers’ affiliation with other unions. As far as the industry changes identity from telecommunications to information, the unions in Brazil have started to develop actions in an attempt to merge Telecommunications and the Information Federations aiming at forming the

96

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Information Federation, incorporating Data Processing, Cable TV and the Telecommunications unions. This attempt is facing difficulties due to power disputes and differences in political-ideological perspectives among the unions. The merging of key economic industries as information and telecommunications would represent a significant gain for unionism and that seems to be the trend. Another important strategy is the action at the international level. This initiative started by gathering workers from subsidiaries of the multinational Telefonica de Espa˜na (which dominates the major Latin America telecom markets) with the creation of an Ibero-American Group of Workers from Telefonica, in 1999. Meetings have been held in S˜ao Paulo, Rio de Janeiro, Buenos Aires and Madrid, Spain, gathering workers from several countries aiming at planing common international actions, particularly concerning human resources issues. The unions and the company have signed a protocol setting up an international code of conduct to be followed by the subsidiaries of Telefonica de Espa˜na all over the world. Similar initiatives together with Italian unions are being taken regarding the Italian telecom company operating in Brazil. Globalization has brought to local unions the need for them too globalize their knowledge and action. For instance, unions in Brazil are concerned with the local implications of the serious financial economic problems faced by the giant World Com – the owner of Embratel, the country’s largest long distance carrier – in the U.S. Globalization of the unions’ proposals on labor issues will be the challenge for a new stage of development if those organizations want to retain their importance in the 21st century.

CONCLUSIONS Globalization and restructuring brought dramatic changes to the telecom industry in general, and for Brazil in particular. Unions were strongly affected by these changes, which they did not want and were not prepared to deal with. Globalization and restructuring are forcing unions to change at the same speed and intensity as the industry did. Unions are reacting mostly in a defensive way, trying to adapt to the new situation: from a culture based on nationalism, collectivism, antagonism, homogeneity, rigidity, they are becoming more realistic and pragmatic trying to develop a new strategy which includes not only local but also global aspects of problems, giving attention to differentiation, pluralism, flexibility and contingency. The new context calls for a more complex approach, since new practices demand the ability to act in a continuum going from cooperation to confrontation according

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97

to circumstances, which requires new political and social concepts, and above all, a radical cultural change. It is interesting to consider that changes in attitude occurred also in the global firms. They came to Brazil ready to explore good business opportunities, among others, a huge market, favourable competitive conditions, cheap labor. Telefonica de Espa˜na, in S˜ao Paulo, at first, tried to dispense with the unions, a behavior unimaginable in Spain. The union, however, was able to negotiate and today their relationship is of mutual respect. The experience with WorldCom/MCI is also interesting. In the U.S., where the company is based, management is known as “viciously against unions.” Contrarily to expectations, in Brazil, where the company acquired the important long-distance carrier, Embratel, they developed a satisfactory relationship with the union. These experiences illustrate once more how complex the global-local relations can be and how mistakenly it would be to consider them from a unilateral perspective. Clearly, the relationship between local unions and global firms is an unbalanced one, but this does not mean that the weaker party has necessarily to lose out. It is important that union acquire new technical skills as well as adopt new attitudes and values: concepts as contingency, flexibility, diversity and plurality, in addition to productivity and quality become crucial for dealing with the new reality. Equality cannot anymore be equate to homogeneity and uniformity.

NOTES 1. Deregulation, liberalization and privatization are distinct concepts although having a point in common, insofar as representing, in different ways and degrees, state retreat from economic intervention (Larangeira, 1998). 2. For a good discussion of the phenomenon of globalization see International Sociology (ISA), 15(2), June, 2000. 3. This argument does not imply in any case technological determinism – a false problem, in Castells’ words – since “techonology is society and society cannot be understood without its technological tools” (Castells, 1997, p. 5, Castells’ emphasis). 4. At the beginning of 2002, more than half the countries in the world had fully privatized their prior state owned operators and 85% of the world market (by revenue) was based on privately-owned incumbent operators indicating the scope of a world wide process of privatization (ITU, 2002). 5. Pressures also came from manufacturers of new telecommunication equipment looking for new markets and a consolidation of technological hegemony, as is the case in the U.S. 6. The CRT case is illustrative since before privatization the collective agreements were quite similar across the Telebr´as System. This is no longer true after privatization when the agreements vary significantly across companies (see Table 2).

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REFERENCES Albuquerque, A. et al. (1999). Telecomunicac¸o˜ es: Um ano de sistema privado no Brasil. Paper presented in Congreso de ALAS, Concepci´on, Chile, outubro. Manuscript. de Almeida, M. He. T. (2000). La pol´ıtica de la privatizacion de las telecomunicaciones en Brasil. S˜ao Paulo. Manuscript. Batt, R., & Darbishire, O. (1997). Institutional determinants of deregulation and restrutucturing in telecommunications: Britain, Germany and the United States compared. Cambridge Political Economy Society. Batt, R., Katz, H., & Keefe, J. (1999). The strategic initiatives of the CWA: Organizations, politics and collective bargaining. Task Force WP#15. Cambridge, MIT, Sloan School, 49 pp. de Carvalho Neto, A. M. (1998). La desreglamentaci´on de las telecomunicaciones en Brasil. In: J. Walter & C. S. Gonz´alez (Eds), La Privatizaci´onde las Telecomunicaciones en la Am´erica Latina. Buenos Aires: Eudeba. Castells, M. (1997). The rise of the network society (2nd ed.). Oxford, UK: Blackwell. Ferner, A., & Terry, M. (1997). United Kingdom. In: H. Katz (Ed.), op. cit. de la Garza, H., & Herrera, F. (1997). Mexico. In: H. Katz (Ed.), op. cit. Hirst, P., & Thompson, G. (1998). Globalization in question. The international economy and the possibilities of governance (4th ed.). Cambridge, UK: Polity Press. International Telecommunication Union (ITU) (2002, March). World telecommunication development report 2002. Reinventing telecoms. Executive Summary, ITU. Katz, H. (Ed.) (1997). Telecommunications. Restructuring work and employment relations worldwide. Ithaca: ILR Press, Cornell University. Katz, H., Batt, R., & Keefe, J. (2002). The revitalization of the CWA: Integrating collective bargaining, political action, and organizing. Paper presented at the IRRA Meeting, January, Atlanta, GA (Manuscript). Katz, H., & Darbishire, O. (Ed.) (2000). Converging divergences: Worldwide changes in employment systems. Ithaca: ILR Press, Cornell University. Larangeira, S. (1998). Reestruturac¸a˜ o no setor de telecomunicac¸o˜ es: Inovac¸o˜ es tecnol´ogicas, privatizac¸a˜ o e desregulamentac¸a˜ o:aspectos da experiˆencia internacional. Revista Latinoamericana de Estudios del Trabajo, 4(8), 159–178. PASTE (Perspectivas para ampliac¸a˜ o e modernizac¸a˜ o do setor de telecomunicac¸o˜ es) (2000). Anatel (Internet: www.anatel.gov.br). Sennett, R. (1998). The corrosion of character. The personal consequences of work in the new capitalism. London: W. W. Norton & Co. Therborn, G. (2000, June). Globalizations: Dimensions, historical waves, regional effects, normative governance. International Sociology, 15(2), 151–179. Walter, J. (1998). Privatizaciones y relaciones laborales en la telefonia lationoamericana. In: Revista Latinoamericana de Estudios del Trabajo (Vol. 4, No. 8, pp. 89–106). Rio de Janeiro: Alast. Wohlers, M. (1999). A reforma do modelo de telecomunicac¸o˜ es: o menu internacional e a opc¸a˜ o brasileira. In: J. Tapia & A. Rallet (Eds), Telecomunica¸co˜ es, Desregulamenta¸ca˜ o e Convergˆencia Tecnol´ogica. Uma An´alise Comparada. Campinas, SP: Unicamp.

FOREIGN DIRECT INVESTMENT AND LOCAL LINKAGES: THE CASE OF THE MEXICAN TELEVISION INDUSTRY IN TIJUANA Jorge Carrillo ABSTRACT The manufacturing transnational corporations (TNC) subsidiaries established in Mexico are playing a priority role within the labor markets in the Mexican economy, not only because of their participation in exports, generation of foreign exchange and employment in Mexico, but also because they are in command of a process of deep economic change. Although the impact TNC subsidiaries have on the local configuration of productive networks, business capacities and links with different sectors has not been studied well enough in Mexico, it is nevertheless widely criticized. In other words, TNC subsidiaries undoubtedly have a positive impact on different areas, such as employment, generating foreign exchange, technological and organizational capacities and labor skills, but it is based on a learning that takes place within the affiliated plants themselves and in intra-firm relations. In spite of government and private efforts, their local spill over effects on Mexican companies is still very weak. The purpose of this study is to identify the impact foreign TNC subsidiaries located in Mexico have on the development of local suppliers.

Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 99–124 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13006-9

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The methodology is based on the application of three different types of questionnaires: one addressed to television TNC assembly plant workers in Tijuana, another to local suppliers, both foreign and national, and a third questionnaire geared to decision-makers and local business associations. We also considered results from other studies and analyzed different sources of information. The questionnaires were applied in Tijuana throughout January 2001. The results of the study shows that there is an important industrial agglomeration in Tijuana and several institutions support this environment of clustering. Nevertheless, there are major disadvantages for increased local productive capabilities, but still room for Mexican suppliers and for public and private policy.

INTRODUCTION The manufacturing TNC subsidiaries established in Mexico are playing a priority role within the labor markets in the Mexican economy, not only because of their participation in exports, generation of foreign exchange and employment in Mexico, but also because they are in command of a process of deep economic change. In only 20 years, Mexico went from exporting natural resources to exporting manufactured goods. TNCs’ macro indicator success has been accompanied by a microeconomic and social process of industrial upgrading based on technological change and a better use of human resources. Although the impact TNC subsidiaries have on the local configuration of productive networks, business capacities and links with different sectors has not been studied well enough in Mexico, it is nevertheless widely criticized. In other words, TNC subsidiaries undoubtedly have a positive impact on different areas, such as employment, generating foreign exchange, technological and organizational capacities and labor skills, but it is based on a learning that takes place within the affiliated plants themselves and in intra-firm relations. In spite of government and private efforts, their local spill over effects on Mexican companies are still very weak. The purpose of this study is to identify the impact foreign TNC subsidiaries located in Mexico have on the development of local suppliers. The methodology is based on the application of three different types of questionnaires: one addressed to television TNC assembly plant workers in Tijuana, another to local suppliers, both foreign and national, and a third questionnaire geared to decision-makers and local business associations. We also considered results from other studies and analyzed different sources of information. The following questionnaires were applied in Tijuana throughout January 2001:

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TV assemblers (TNCs affiliates or OEMs) Foreign local suppliers Mexican local suppliers Policy makers Key interviews

7 10 7 4 2

Total interviews

30

This article was structured into two sections. The first section presents the importance of the television industry (TVI) in Mexico and the industrial upgrading it has been through. The second section presents the structure of relations between television TNC subsidiaries and their suppliers, and analyzes the impact TNC subsidiaries have on local suppliers (foreign and locals).

IMPORTANCE OF THE TELEVISION INDUSTRY IN MEXICO AND ITS UPGRADING PROCESS Television producers have been winners in the trade opening and sectorial deregulation in Mexico. The color television industry has attracted important flows of foreign direct investment (FDI) under the maquila program. The number of televisions shipped from Mexico to the U.S. grew from 1.7 millions in 1987 to over 25 millions in 1998. According to the MAGIC-CEPAL computer program, the Mexican participation in television imports (HTS item 8528) grew from 40.6% in 1990 to 78.8% in 1996. Other participants, such as Malaysia, Japan and Thailand left Mexico far behind. The growth of the TVI in Mexico has been a direct result of the changes in this industry in the United States. Towards the mid-1980s, European and mainly Asian TNCs forced most U.S. producers to abandon this sector. Thomson purchased the General Electric and RCA plants, Philips bought Sylvania and Magnavox trademarks. Matsushita purchased Quasar. LG Electronics later bought all Zenith operations. This produced a television industry mainly divided among European TNCs with production plants in the U.S. (which by 1990 controled close to 34% of the U.S. market) and a rapid growth of mainly Japanese TNCs that invested in the creation of a television cluster in Tijuana, on the border with San Diego, California close to Long Beach. Table 1 shows the current basic structure of television industry clusters in Mexico in which the participation of two Mexican states bordering with the U.S. stands out.

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Table 1. Mexico: TNC’s Television Affiliates in Northern Border (2000). Firmsa

TV Productsb

Country of Origin

Annual Capacity

Employment

1

Tijuana

Japan

1,500,000

3,160

Sanyo (1982)

3

Tijuana

Japan

1,100,000

2,200

Sony (1985) (1988)

5

Tijuana, Mexicali

Japan

3,000,000

6,500

Hitachi (1986) Samsung (1988) (1995) JVC (1996)

1 4

Tijuana Tijuana, Mexicali

Japan South Korea

900,000 1,850,000

3,200 3,600

1

Tijuana

700,000

500

Daewoo (199?)

2

LG Electronics (1988) Mitsubishi (1987)

2

Mexicali San Luis R´ıo Colorado Mexicali

TV, components (Quassar, Panasonic, National, Technics) TV (13

20

27

32

36

) DY, components (Sanyo) TV (13

36

) DY, components PC monitors (Sony) TV, components (Hitachi) TV (32

) CRT, components, DY, Projection TV, Digital TV, VCR (Samsung) TV (13

20

27

32

36

) components (JVC) TV, CRT, PC monitors, VCR

2

Ciudad Ju´arez Cluster Thomson (1968.) Philips (n.d.) Orion (n.d.) Toshiba (n.d.)

2 1 1 1

Baja California cluster Matsushita (1980)

Japan South Korea

n.d

2,600

South Korea

n.d.

2,200

Mexicali

TV, components, PC monitors (Zenith, Goldstar) TV, components

Japan

n.d.

1,000 (1997)

Cd. Juarez Cd. Juarez Cd. Juarez Cd. Juarez

TV DY, chassis’s (GE, RCA) TV, components (Magnavox, Sylvania) n.d. TV, chassis’s

France Netherlands South Korea Japan

3,500.000 (99) n.d. n.d. n.d.

Source: © Carrillo (2001a). Data from Bancomext and managers interviews. See Contreras y Carrillo (2000); Carrillo y Mortimore (1998). a Information in parenthesis is the year of entry based on manager interviews. b Information in parenthesis is the TV models assembled.

6,400 (1999) 1,700 (1999) n.d. n.d.

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City

Plants

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Table 2. NAFTA: TV Production and Consumption (000 units). Country

Production

Consumption

1998

2003

1998

2003

Mexico United States Canada

25,361

34,800

400

400

1,560 29,925 1,900

2,000 29,200 2,100

Total

25,784

35,200

33,385

33,300

Source: Contreras y Carrillo (2000) based on Bancomext (1999).

Seven out of every 10 color television sets sold in the U.S. market in 1996 were produced in Mexico by less than 10 firms located in Tijuana, Mexicali and Ciudad Ju´arez (Carrillo & Mortimore, 1998). Around 110 electronic plants have currently been established on the Northern border, many of which assemble televisions and components from Japanese, Korean, Taiwanese, European and U.S. TNCs. In the year 2000, the television complex in the north of Mexico employed over 90,000 workers, including more than 10,000 technicians and engineers, and produced close to 30 million televisions per year, 90% for the U.S. market. According to projections by the Mexican Foreign Trade Bank (Banco Mexicano de Comercio Exterior/Bancomext), by the year 2003 the consumption of new television sets in the U.S. will have stabilized at around 29 millions units per year, whereas the whole North America region will be consuming a total of 33 million television sets (Table 2). By then, television production in Mexico will have surpassed the demand of the North America region and will be supplying other markets, such as Central and South America, regions to which firms, such as Sony and Samsung, have been exporting for years. The sustained growth of the TVI in Mexico is a result of TNCs’ high international competitiveness. Various studies have noted that this industry reached prominence thanks to different comparative advantages, such as geographic closeness to the United States; political and labor stability as well as labor force flexibility, availability and cost. Other advantages have also influenced this prominence: open trade policies, deregulation of this sector and intense promotion of FDI. However, the strategies developed by subsidiaries and headquarters, which have derived in an upgrading process of the subsidiaries in Mexico, are the main cause of high competitiveness (Barajas Escamilla, 2000; Carrillo & Mortimore, 1998; Contreras & Carrillo, 2000; Lara, 1998). According to the top management of these subsidiaries (Carrillo & Mortimore, 1998), technology and human resources are among the main internal factors that increase competitiveness. World class technology (equipment, machinery

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and innovations); increasing automation; expanding research and development; applying engineering to design; implanting technologies to lean and flexible administration and increasing the number of highly specialized technicians and professionals should be noted. Automation, for example, takes place in input reception, the assembly of intermediary and final product components and packing final products. The Samsung Display plant is an extreme case: 95% of the value of its machinery is automated.1 In the second place, there is increasing autonomy in issues such as the selection, management and use of human resources; the selection of local suppliers; adjusting organizational technologies and intra-firm technology transference. This has allowed TNCs in Mexico to evolve from traditional assembly activities to more sophisticated manufacturing operations, such as high quality production, development and design (Barajas Escamilla, 2000; Carrillo & Mortimore, 1998; Lara, 1998). The number of television models and other products such as computer components and monitors has increased outstandingly (Table 1). Productive complexity is accompanied by organizational and individual processes derived from accumulated experience in the technical sphere, in administration and in directing local TNC personnel. It should therefore be noted that the relevant corporate strategies have consisted not only in the increase of productive functions and the role played by television TNC subsidiaries in Tijuana, but their greater productive capacity, the increase in the volume of employment and a process of transferring knowledge and continuous learning. Television plants in Tijuana have a trajectory of learning the processes of which have become more complex, technologically more sophisticated and require greater participation of qualified personnel, which has made traditional assembly work, such as television cabinets (Hitachi and Sony), turn into manufacturing plants with a great interdependence in various areas and headquarters that will soon become global manufacturers. This trend towards upgrading has in part been the result of a lengthy industrial cluster process. It all started in 1969 in Ciudad Ju´arez and in 1979 in Tijuana with the arrival of RCA and Matsushita, but it was not until the 80s that these same firms made new investments and other competing TNCs were transferred to Mexico. The development of component-producing plants started in the mid-1990s and the number of local suppliers of passive components and services is expected to grow (Table 3). In this context Tijuana has become “the television Mecca”2 and the most dynamic source of television sets imported from Mexico to the United States. In 1998, the Tijuana cluster produced more than 9 million televison sets. In two years only (from 1994 to 1996), Asian firms invested over one thousand million dollars in new plants in this city (Korea invested $650 million dollars and Japan $400 millions).3

Company

Long-Term Relation

(%) of Local Purchases

Decisions Where to Source Inputs

Long Term Expectation for Next 5 Years

Main Obstacles for Long-Term Linkages

Encourage Other Foreign Firms to Located in the Region

Matsushita Sony Este Hitachi Samsung Mexicana

Yes Yes No Yes

80 – – 75

The affiliate The affiliate The affiliate Another company within the TNC?

Increase Increase Increase Increase

No No Yes –

JVC

Yes

–

The affiliate

Increase

Samsung Display LG Electronics

No Yes

20 –

The affiliate The affiliate

Increase Increase

Lack of interest by your company Quality and distribution problems Quality and distribution problems Lack of potential partners that match TNC capability and quality requirements Lack of potential partners that match TNC capability and quality requirements Lack of technological capacity Lack of potential partners that match TNC capability and quality requirements

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Table 3. Mexico: Television TNCs Affiliates in Tijuana (2001) Long-Term Relations from TNCs to Local Suppliers.

Yes

Yes Yes

Source: © Carrillo (2001a). Project: Special Business Survey on Linkages Between Local Firms and Foreign Affiliates of TNCs 2000–2001. The Case of TV Industry in Tijuana.

105

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Television TNC in Tijuana have been through deep modifications in product complexity, subsidiary autonomy, design activities, human resource use and plant modernization (Carrillo & Mortimore, 1998). A comparison of this study to the piece of research we here present shows that: (a) the participation of Mexicans in top management has increased; (b) subsidiary autonomy in respect to the headquarters has grown; (c) there is an emphasis on design activities; (d) automation has grown; (e) technological levels have increased (“comparable to the highest world wide level” in some firms); and (f) certification of quality and environmental processes has increased. New activities such as financial and administrative management and technological information have been through deep changes. Television subsidiaries in Tijuana are relatively old (11 years on average) and have rapidly increased the number of people employed: from 377 people on average in 1985 to over 2,900 in the year 2000. Whereas in May 1995, five television TNCs were employing 10,148 workers, by December 2000 close to 20,000 people worked for six firms.

LOCAL SUPPLIERS AND VERTICAL INTEGRATION The electric-electronic industry in Mexico in the maquila program has historically had a limited level of national inputs (under 1%) and, apart from using its labor force, has not generated significant links with the national economy. In fact, before the North American Free Trade Agreement (NAFTA), provision HTS 9802 sanctioned the increase of Mexican components assembled for exportation to the U.S. through the payment of taxes on all parts and inputs that were not from the United States. However, the rules of origin in NAFTA have changed this situation and thus produced a different result. The best example of the effect of these rules is vertical integration achieved thanks to the incorporation of core components, such as cathode-ray tubes, which represent an extremely high ratio of a television’s added value.4 Figure 1 shows the distribution of firms in North America that are linked to television OEMs in Mexico (19 plants). It can be observed that most of the provisioning takes place in the U.S. (430) and a lesser part in Mexico (95). The links between final transnational television assembly plants and their local suppliers are very different and depend first of all on whether they belong to transnational networks or not and secondly on the level they occupy within the production chain. These links are close and long-term. Excepting intra-firm

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Fig. 1. Supplier Structure in the Television Industry in Mexico. Source: Contreras and Carrillo (2000) based on BANCOMEXT.

relations, such as those existing between Samsung and Matsushita with other TNC subsidiaries, which almost by definition are close and long-term, other firms such as JVC and Sony mentioned they did have agreements of this sort. Only Hitachi and Samsung Display claimed not to have this kind of relations with local suppliers (Table 3). In all cases, decisions about where supplies are to come from were taken by the interviewed subsidiary. Only Samsung Electronics mentioned that these decisions were taken by another subsidiary of the same firm. They all expect their long-term relations with local suppliers to grow in the next five years. Only Hitachi is drawing foreign suppliers to the region in order to be able to have more reliable suppliers with the capacity and quality they require. A lack of the required capacity and quality as well as a lack of interest of headquarters are the main hindrances to development (Table 3). In regard to the TNCs response to support suppliers in order to develop deeper long-term relations, TNC subsidiaries can be seen to draw suppliers close to their plants by providing them with information about their requirements in demand and market, technical assistance, backing in supply logistics, price negotiation and giving them support so they can have more clients (Table 4). Most of them do not receive financial assistance, except one case that acknowledged it gave its suppliers this kind of support. The firms belonging to TNCs believe they are making important efforts to develop and support their suppliers in order to thus maintain more stable and lasting relations with them.

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Table 4. M´exico: TNCs TV Affiliates in Tijuana (2001). Statement Your company has assisted locally owned suppliers to locate close to you. Your company has provided local suppliers with information on future demand requirements, market trends, etc. Your company has provided technical assistance to local suppliers. Your company has provided financial support to local suppliers. Your company has assisted local suppliers in sourcing various types of inputs. Your company has assisted in the training of the management of local suppliers. Your company regularly meets suppliers to negotiate prices of the various inputs. Your company has reached agreements with local suppliers concerning the allocation of inventories or the sharing of costs for product development. Your company has assisted local suppliers in the search for new customers abroad. As a result of a long-term relation with your company, some locally-owned suppliers have begun exporting to other parts of your TNC.

Yes

No

Not Relevant

5

1

1

7

–

–

6 1 5

1 6 2

– – –

3

4

–

6

1

–

5

2

–

1

6

–

6

–

1

Note: TNCs Long-Term Relations with Local Suppliers and their Support. Source: © Carrillo (2001a). Project: Special Business Survey on Linkages Between Local Firms and Foreign Affiliates of TNCs 2000–2001. The Case of TV Industry in Tijuana.

The different interviews carried out in January 2001 allowed us to conclude that television subsidiaries provision themselves with passive and active components5 through: (i) Production within the OEM plants themselves6 (“in-house production”). (ii) Purchasing from other subsidiaries of their own corporation (“vertical integration”). (iii) Outsourcing from other TNC television subsidiaries (“inter-maquila trade”). (iv) Outsourcing from local suppliers, either Mexican or foreign.

Productive Evolution of TV Firms In Fig. 2 you can observe the different forms of provisioning occuring in the Tijuana cluster. This figure shows the three forms of linking with the assembly plants that prevail (ii, iii and iv), the different relations existing between suppliers

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Fig. 2. TNC’s TV Affiliates and Local Suppliers Located in Tijuana (2001). Source: © Carrillo (2001a).

and TNCs7 and the complex interweaving created around the local firms producing televisions. Current client-supplier relations in the TVI in Tijuana are the result of a long process that has taken place in three stages. In the first stage (from the late 1970s to the 1980s), Asian IEDs in Tijuana were characterized by final television assembly and the establishment of operations related to the production of components for standardized technology (Lara, 1998). There were hardly any direct suppliers in this period. Instead there were mainly Mexican service firms. In the second stage (from the late 1980s to the mid-1990s), components, such as cabinets, plates, speakers and connectors, were integrated vertically. These components tend to be labor-intensive parts. The manual and automated subassembly of printed cards that is now carried out in the plants is of particular relevance, thus substatially intensifying capital and automation. It is in this stage that technology, knowledge and personnel transferred from the headquarters to the subsidiary became critical elements in the use of new insertion technologies and the new activities to be developed (Lara, 1998). Both foreign and Mexican suppliers start to develop usually by the initiative of TNCs. The third and current stage, beginning with the signing of NAFTA, the new conditions derived from the rules of origin and the maquila’s enormous dynamism reinforces three processes: (a) relocation of Asian suppliers in Mexico responding to an initiative of television TNCs carried out through agreements signed between corporations;8 (b) vertical integration through the establishment of new plants of corporations specialized in components

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(via agreements signed between divisions) (Barajas Escamilla, 2000; Carrillo & Mortimore, 1998; Contreras & Kenney, 2000; Lara, 1998); and (c) dissemination of Mexican suppliers (either local or national) with low added value outsourcing contracts, such as cardboard packing and different services such as garments for the workers and metal structures and pieces. These suppliers were developed by TNCs subsidiaries in Tijuana and only in some cases did the intiatives come from Mexican firms.9 Firms providing other services, such as legal advise, customs services, security, food as well as infrastructure and technlogical information have also been strengthened.10 In relation to this third stage, Lara (1998) recognized the existence in 1995 of 27 Japanese plants linked to television manufacture, including final assembly plants and supplier firms. He identified a tendency towards the production of a greater number of components and greater technological complexity in local operations, including the production of converters, transformers, power sources and cathode-ray tubes; a progressive escalade towards capital-intensive processes, which among other things require more highly qualified labor force (Lara, 1998). A recent study (Contreras & Carrillo, 2000), concludes that out of over 500 TVI suppliers, over a fifth are firms established in Mexico, as can be seen in Fig. 1. This study emphasizes on the relocation of Japanese, Korean and Taiwanese suppliers in Mexico in order to supply increasingly more complex parts and components and develop local provisioning networks based on close coordination and the justin-time system (JIT).11 We identified complex provisioning strategies and differentiated TNCs, as can be seen in Fig. 2 and Table 5. Based on the information available, we can say the television cluster in Tijuana is starting to acquire an increasingly more complex configuration with first, second and third level firms.

Vertical Integration Since 1995, television assembly plants declared that the number of “satellite” suppliers would increase in the next five years and they would thus reach greater vertical integration (Carrillo & Mortimore, 1998). Considerable progress has been made in this direction. Projection mirrors, cathode-ray tubes, cathode-ray tube glass, power sources, tuners and rechargeable batteries are among the parts and components that set up production in the region. In any case, these are parts and components that until the early 90s were imported from Japan and the United States. Headquarters played a relevant role in this vertical integration process. A recent study (Barajas Escamilla, 2000) found headquarters gave subsidiary assembly

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Table 5. Mexico: TNC’s Television in Tijuana and Local Suppliers 2000. Firms/Plants

Components “In-House”

Local Components

Inter-Maquila TV Trade

Matsushita

Turner Model 1 VCO Turner Model 2 components

Bags (4) Plastic boxes Cardboard boxes Plastic parts Wood cabinets Uniforms Labels Manuals and instructive CRT Packing Components

Toshiba Mitsubishi Sony Hitachi

Sanyo (SIA)

Screen Syntonizer Deflection Yolk Electronic chassis Transformer Plastics packing

Parts of plastic Bags of plastic (3) Boxes cardboard Uniforms Wooden platforms Components

Samsung Thomson Philips Sony Matsuchita

Sony Tijuana Este

Kinescope Chassis Printed circuits Deflection Yolk Transformer Syntonizer Plastics Components

Bags of plastic (3) Cabinets of plastic (2) Cabinets of wood Uniforms Repair molds Plastics

JVC Matsushita

Bags of plastic Cabinets of plastic Parts of plastic Batteries

Samsung JVC Matsushita

Cabinets Component Bags of plastic (3) Boxes of cardboard plastic Manuals and instructive

Thosiba Thomson LG Electronics Daewoo Hitachi Matsushita Samsung Display Samsung Electro mechanics

Hitachi

Samsung Electronics

Cabinets (Frontal, Back) Kinescope Transformer Channel turner Deflection Yolk Unmagnetizing bobbin Components

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Table 5. (Continued ) Firms/Plants

Components “In-House”

Local Components

Inter-Maquila TV Trade

Samsung Display

Kinescope

Glass Components Bags of plastic (3) Boxes of cardboard plastic Manuals and instructive Uniforms, Cleaning products Safety globes

Philips Sanyo JVC Zenith Matsushita

Samsung Electro mechanics (SEMSA)

Turners Reflexion Yolk Transformers Speakers Capacitors

Bags of plastic (3) Boxes of cardboard plastic Manuals and instructive

Matsushita Toshiba Thomson Goldstar Sharp

JVC

Kinescope Electronic components Metal Cooper wire Bronze wire Printed circuits Cabinets Box Plastics

Cabinets of plastic (2) Boxes of cardboard Packs Bags of plastic Boxes of cardboard Manuals and instructive Uniforms (2) Repair of molds Aluminum Electrical insolution

Sony Matsushita Sharp Hitachi

Source: © Carrillo (2001a), base on Barajas Escamilla (2000) and interviews with managers.

plants important support with technical assistance. Technical assistance, however, was not homogeneous. Measured in terms of event frequency, JVC and Matsushita were high in blue prints, but Hitachi was low; Sony was low in machinery and tools; Samsung Display, Sony and Hitachi were high in production and quality control, but Samsung Electronics was low. In relation to organizational assistance patterns, this author found that, in the case of Sony and Samsung plants, both material, part and component traffic and logistics were of relevance to provisioning for these products. Sanyo, Matsushita and Hitachi would often receive assistance in organization and management. There are important differences between Japanese and Korean TNC’s in the Tijuana-Mexicali region. Whereas Japanese firms (Sony, Matsushita, Sanyo and JVC) maintain their engineering centers in southern California and produce cathode-ray tubes (CRTs) in the U.S. (Sony and LG Electronics), Korean firms

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113

have integrated new operations with sister plants to produce glass (Samsung with Asahi and Corning) and CRTs (Samsung and Daewoo) and have drawn some foreign suppliers: Samsung (2 firms), Goldstar (1) Daewoo (1). TNCs’ vertical integration strategy can be seen in Table 5.

Inter-maquila Outsourcing Intra-firm relations and inter-firm trade among TNCs television subsidiaries have achieved greater importance in the local context. Examples of this tendency: Sanyo sells baffle yokes and tuners to Sony and Matsushita; and Hitachi sells cabinets to JVC (Table 5). The Samsung television plant is a good example of this kind of trade. It sells CRTs to LG Electronics and Daewoo; and purchases cabinets from Hitachi, CRTs from Samsung Display and components and devices from Samsung Electromechanics. It also purchases from Panasonic and Thomson. Figure 3 presents trade relations between TNCs. It is clear that there is intensive intermaquila trade in OEMs. Everything shows that NAFTA’s rules will make this form of trade more intensive not only between subsidiaries in Tijuana, but with other television and computation subsidiaries in northern Mexico. Our interviewees claimed long-term relations with local suppliers in the region, mainly TNCs, would strenthen in the next five years. This scenario is mainly sustained

Fig. 3. Inter TNC’s Trade in TV Industry, Tijuana (2001). Source: © Carrillo (2001a), based on Barajas Escamilla (2000); Contreras and Carrillo (2000); and manager interviews.

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by the economies of scale, timely delivery and tariff exemptions contained in NAFTA. Samsung Display and Samsung Televisions, for example, mentioned that inter-maquila trade will increase in the next years mainly due to the closure of factories that manufacture their products in the United States, the need to reach rules of origin and the increasing production requirements local suppliers cannot supply.12

Local Suppliers Foreign Local Suppliers The general pattern of local provisioning in products that are not vertically integrated for TNCs television subsidiaries has been to maintain relations with foreign suppliers that enjoy incentives derived from belonging to the maquila program (Barajas Escamilla, 2000)13 like Sony, Sanyo and Samsung and JVC and to a lesser degree Matsushita. According to our study, a trade relations exists locally between television OEM firms and ten foreign suppliers interviewed (without considering Samsung’s firms producing cathode-ray tubes and components (level 1)). It considers firms manufacturing passive, electric, metallic and plastic components (level 2); and basic raw materials and indirect materials (level 3). From cardboard boxes to plastic cabinets and molds are produced in this city by medium-sized firms, both maquila and non-maquila. Packing and wood cabinet firms arrived in the late 80s and molds and plastic cabinets came in after NAFTA. Battery and plastic injection suppliers tend to be capital-intensive and automated; and cabinet suppliers tend to be productively complex and labor-intensive, although their capital inverstment is also relevant. Information provided by a transnational subsidiary shows that in January 2001, this firm had 35 suppliers in Tijuana of which 27 were foreign and 8 Mexican.14 The following results stand out: These 35 firms supplied 22 products to different television firms. Nine different products are supplied to these television OEMs through two or more local firms (inter-firm competition). In three cases, suppliers sell more than one product each. Out of the total sales reported in the year 2000, on average 53% were “domestic” sales (i.e. indirect exports) and the remaining 47% were direct exports. The strategies, however, are very different since for some firms exports represented 99% of their sales, whereas others had no exports. Domestic sales oriented to TNC

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115

subsidiaries reached 47% of the total sales on average. Heterogeneity, however, was common (between 100 and 1% of all sales). On average, only 6% of the total sales were geared to local firms that are not transnational. Average sales per firm were close to 40 million dollars in almost 19 TNCs and a little over three local firms. In the case of purchases reported for the same year, they were mostly imports (72% on average) and almost all were made to TNC subsidiaries. Only 3% of the total purchases were made to local Mexican suppliers (Table 6). Foreign suppliers in Tijuana therefore import practically all their inputs and components and once the product is made, they export it (directly or indirectly) through transnational subsidiaries. In regards to TNC participation with these suppliers, except one firm, they all have mainly outsourcing contracts with assembly plants. Some of these TNC firms support outsourcing by transferring product and process technology through imitation and learning, although in most cases there is no transference. In six firms TNCs provided suppliers with technical assistance and quality control. The workers in supplier firms are generally trained by the TNCs; between 5 and 20 people are trained like this. Suppliers have a considerable number of links with transnational clients (26 on average); close to 70% of the plants have up to 10 of these clients. Although the managers we interviewed had a positive opinion of this, two of them considered there were no benefits. There are different benefits: use of international quality standards, new contracts, an increase in investment and employment, more technology and training, more links with other firms. However, there were also some negative opinions: a lot of pressure, little flexibility to look for new clients, pressure to reduce costs, cultural differences and government red tape. Finally, the interviewed managers expressed contradictory opinions about how public policies have affected the links between suppliers and TNCs. Whereas some considered the policies included in the questionnaire did not exist, others considered they had a positive impact. A considerable number of managers said the following policies did not exist: financial assistance (89% of the firms), training at work provided by the government (78%), incentives (67%), matchmaking (50%) and information (44%). An important percentage had a positive opinion of the impact the following policies have: seminars (67%), information (45%), incentives (22%), training (22%), match-making (12%) and financial assistance (11%). Only two policy measures were evaluated negatively: incentives (1 firm) and the new sectorial program (2 firms) due to the fact that they would imply tax increases. Three policy measures were considered to have an irrelevant impact: match-making (37%), seminars (33%) and information (11%).

116

Table 6. Mexico: Foreign Firms Suppliers of Television TNCs Affiliates in Tijuana (2001). Purchases and Sales Total Sales

Domestics Sales

Exports

TNC

Locals

39,627,587 7,925,517 100%

18,675,363 3,735,073 47%

2,300,000 1,150,000 6%

18,652,224 6,217,408 47%

Mexican suppliers Totals 13,404,000 Average 2,234,000 Percentage 100%

8,921,500 1,486,917 67%

2,557,500 426,250 19%

1,925,000 641,667 14%

Totals Average Percentage

Total Purchases

Domestic Purchases

Imports

TNC

Locals

23,820,350 7,940,117 100%

6,031,817 2,010,606 25%

600,000 600,000 3%

17,188,533 8,594,267 72%

5,962,280 1,192,456 100%

40,000 40,000 1%

1,372,456 274,491 23%

4,549,824 909,965 76%

Source: © Carrillo (2001a). Project: Special Business Survey on Linkages Between Local Firms and Foreign Affiliates of TNCs 2000–2001. The Case of TV Industry in Tijuana.

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In any case, many more managers claimed there were no policy measures that would affect the links between firms and TNCs (29). Less managers said impact was positive (16), there was no impact (7) or it was negative (3). Mexican Local Suppliers As opposed to the previous types of provisioning, the inclusion of Mexican firms as significant suppliers has not had the expected projection. Seven Mexican firms supplying different television assembly plants were interviewed in Tijuana. They do not work on a basis of exclusivity nor do they supply key components. They only supply low value added inputs. Figure 2 shows the different relations television subsidiaries have with foreign firms in Tijuana. The interviews to these seven Mexican suppliers show that they sell low value added inputs, such as basic raw materials and particularly indirect materials (level 3). Small firms (with 57 workers on average), produce plastic, bags, cardboard boxes, labels, manuals, platforms and uniforms. Some of them belong to the maquila program. They are firms and workshops that arrived in the late 1980s and some of them only recently started to operate. Out of the total sales reported (over 13 million dollars), on average 86% correspond to “domestic sales” and the remaining 14% to exports. This was more or less common behavior among firms. As was to be expected, most domestic sales went to TNCs (67% of the total sales) and a lower percentage went to local firms (19% of the total). In relation to foreign suppliers, in relative terms Mexican firms purchased three times more from local firms (Table 6). On the contrary, most purchases came from imports (76%) and the remaining 24% of domestic purchases mainly corresponded to local firms (23%) (only 1% of all purchases were made to TNC subsidiaries (Table 6). It should be noted that total sales way surpassed total purchases, which does not occur with foreign suppliers. Imports, on the contrary, way surpassed exports as opposed to what happens in foreign firms. Evidence shows there is a common pattern that is similar to other branches at the northern border where the operations of Mexican firms highly depend on imports. Purchases from national firms are higher, which implies that they are relatively more integrated at a local level than foreign firms. Business volumes, however, are much lower. The average sales of foreign suppliers in Tijuana were 2.6 times larger than national sales (7.7 million dollars as opposed to 2.2) and average purchases 5.6 times larger (7.9 millions as opposed to 1.2). As opposed to foreign suppliers, Mexican firms do not have contracts with TNCs, except a firm with a franchise. In one case only did a TNC support a firm by transfering process and product technology, importing machinery and imitating Japanese technology. In two firms, a TNC provided training to outsourcing workers

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(2–3 people). In two cases only, TNCs gave assistance to Mexican firms: one was occasional and technical assistance and the other was information. Although some Mexican suppliers have an important number of transnational clients (41 on average), the vast majority have between 10 and 30 clients of this kind. The interviewed managers had a positive opinion of their relations with their clients. They mentioned the following benefits: market permanence, specialization niches, new products and updated technology, being able to provide services at the plant; getting to know the market better, increasing production and making new clients. It is surprising that only two managers expressed negative opinions. One said he preferred North American and Asian suppliers to Mexican suppliers and the other mentioned that contracts did not guarantee sales. In regards to the managers’ opinion regarding governmental policy measures and their effect on the articulation between suppliers and TNCs, most mentioned that they did not exist (80% of the answers). Only two firms (33%) said the following measures were positive: incentives, training, information and match-making. Two firms considered seminars to have no impact at all.

THE PROBLEMS After describing some characteristics of suppliers and their relations with TNCs, it is convenient to make a deeper reflection. The opinions and characteristics of Mexican suppliers are congruous with the opinions given by television plant managers. Since 1995, the year in which they were interviewed, they stopped considering local provisioning a priority within their corporate strategies for competitiveness. Recent interviews confirmed that from a TNC’s perspective the development expectations of new Mexican local suppliers are still low. Among the main reasons for these poor links, the managers mentioned a lack of capacity to meet the high production volumes required, low quality production, high prices and delivery delays, aspects that are generally linked to a firm’s small size. A Philips Consumer Electronics officer mentioned to the USITC that “Mexico does not have the technological infrastructure among its domestic suppliers to support the high volume of requirements for leading electronic products, such as televisions and computer monitors” (USITC, 2000, p. 4). Contreras (2000) found what JVC required from JIT suppliers and there was no way national firms could reach these requirements and maintain prices, which seriously affected trust and Japanese word of honor. The corporate agreements signed in the country in which the TNC originated are an additional problem. Price conditions, quality and delivery agreed among TNCs are a serious admission barrier for local suppliers since they do not

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have the capacity to meet these requirements. Samsung, for example, mentioned these Korean agreements as the main problem to find firms in the region (Contreras, 2000). Other problems at a different level are the unreliability of official statistics, which do not reflect the increasing vertical integration process in the region (cathode-ray tubes, for example) and the incorporation of minor components and different services.15 The fact that it is well known that with time there is no increase in the contents of national inputs in spite of all efforts, becomes an inhibiting factor for the development of new suppliers.16 The serious problem of work turnover17 equally affects television OEMs and PYMES (SMEs). In the latter, however, it is very difficult to compete for labor force since they do not have the capacity, wages and benefits nor the work conditions granted by TNCs. Only foreign subsidiaries can offer these economic and noneconomic advantages. Worker turnover is a serious problem not only because of the cost associated to mobility and training (around 300 dollars per worker), but also because it is very difficult to introduce work involvement programs, continue growing at a high rate and draw new suppliers at the same time. Worker turnover has been associated to the dynamism of the maquila industry in the border zone (Carrillo, 2001b). Although high worker turnover started in the 1980s, the way the industrialization has accelerated with NAFTA has made turnover rates increase. Workers usually start working in a plant and after a short while start moving to other maquila plants. So long as they remain within the “maquila circuit,” they are estimated to move to between three and four plants. It is nevertheless important to recognize that around 40% of the workers are “stable”(they do not change jobs), whereas 60% “rotate jobs” (move from one plant to another) (Carrillo y Santiba˜nez, 2001). In this process, large firms generally offer better work conditions, such as cafeterias, health care, free transport, food subsidies, etc., which makes competition for qualified and unqualified labor more difficult, particularly in the case of the small and medium firms and TNC suppliers, since they are small firms. The history of this business backwardness is complex: On the one hand, the incorporation of Mexican components under U.S. mechanism HTS 9802 was sanctioned.18 On the other, Mexican public policies were not sound. The industrial policy never considered a minimal percentage of local content (since maquilas were explicitly excluded from sectorial policies); promotion and support programs had no success at all; and local small and medium-sized firms were de facto inhibited in order to improve perfomance vis-`a-vis a large bureaucracy and lack of financial support. Apart from this, there was no manufacturing tradition in border cities such as Tijuana and Ju´arez and they were located far from Mexican industrial and consumption centers (Monterrey, Guadalajara and Mexico City). A set of

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internal and external situations inhibited the development of local suppliers. It was not until the 1980s that this slow process of creating productive and service links started. With the important growth of the industrial cluster (derived from the maquila program) and the new demands and opportunities derived from NAFTA, it managed to give a qualitative leap forward in the mid-1990s. All this suggests that in the sphere of developing suppliers, the Mexican industrial policy faces an enormous challenge as part of the strategies to improve the firms’ international competitiveness. Unfortunately, the managers interviewed in 1995 and at the beginning of the year 2001 did not consider national policies nor Mexican suppliers as relevant aspects of competitiveness. Some firms even complained about the lack of suppliers with whom to work (because of quality, delivery and price problems). The national government’s objective of doubling inputs for the maquila industry seems highly unlikely. In spite of this, it is important to acknowledge the changes and tendencies in the TVI. In the first place, the Mexican contents increased from 0.6 to 3.7% during 1990–1995 and some firms even reached 8%. In the second place, the OEMs themselves require and are looking for local suppliers. In recent years, all television assembly plants have participated in numerous local and national trade fairs. Sony is a good example of this since it has carried out exclusive exhibitions of its own inputs. In the third place, the dissemination of new services (such as internet) is likely to strengthen this cluster. To conclude this section, we can note that at present parts and components incorporated to televisions manufactured in Mexico represent a market of over 8 thousand million dollars per year. It is a market that has traditionally been beyond the reach of Mexican firms due to various circumstances, such as the difficulty to meet quality standards and the decrease in both the costs and delivery timing the TNCs demand. Although important progress has been made within production in TNC television subsidiaries in Mexico and in the production of some components by foreign firms, given the pressure of NAFTA’s rules of origin, Mexican suppliers lag behind in spite of the public policies we present below. However, according to Bancomext (1998), the first steps have been given to unfold a long-term strategy to stimulate local linkage. This study shows that in fact industrial interweaving is stronger since there is an important cluster of plants linked to television production in which practically all firms competing in the market are located in three cities in the north of Mexico (Tijuana, Mexicali and Ju´arez). In the second place, there is a complex process of integration: vertical integration (final assembly, subassembly, components), horizontal integration (inter-maquila sales), peripheral integration (input and service suppliers) and cooperation integration (between firms and plants). In Mexico, links between universities and technological institutes and television firms

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will also grow stronger, (although articulation is currently weak19 ), at the same time as new stakeholders and association experiences emerge, as will be seen below.

CONCLUSIONS First, Mexican suppliers in Tijuana are linked to other television TNC subsidiaries in the second and third line, in other words, they usually carry out unsophisticated activities with low added value. Although this is changing with NAFTA, it is a slow process and the future scenario is not yet clear. Second, although television TNC subsidiaries in Tijuana share a common pattern of local provisioning,20 the firms present important differences depending on their own trajectories. Whereas the Korean firm has been notorious for its vertical integration strategy, one of the Japanese firms has reinforced itself with outside suppliers. The case of the Korean TNC reveals how within the same corporation there are different strategies to develop local suppliers (both foreign and Mexican). Before NAFTA, the corporation’s main motivation to draw and develop suppliers was to reduce production costs (in transport and delivery deadlines). Another reason promoted by the subsidiary was added later on: to continue enjoying tariff exemptions (by complying with the rules of origin). NAFTA thus accelerated plans to have nearby suppliers in Tijuana. Agreements were thus signed between Samsung corporation and suppliers from other divisions in Korea, as well as agreements with Japanese TNCs and U.S. medium-scale firms. As a result of NAFTA, one of the Samsung plants is now planning to look for national suppliers of chemical products (for example basic inputs such as sulphuric acid, nitric acid and caustic soda), both to be able to comply with the rules of origin and to be able to confine its waste in Mexican territory.21 Whereas in one case the subsidiary of this corporation faced the following problems to develop national suppliers: the lack of a culture of responsibility and compliance, high production costs (derived from the national firms’ limited technological competence), another subsidiary faced the existence of pre-established corporate agreements with suppliers in Korea. Third and final conclusion, the behavior of the television industry in Tijuana in terms of its links with the Mexican economy that have already been described is not unique to this sector. The electronic plants in Tijuana (Barajas Escamilla, 2000), as well as transnational autopart maquilas in Ciudad Ju´arez (Carrillo, Miker y Morales, 2001) behave similarly. Furthermore, very few links have been found between autoindustries in Mexico (assembly plants and non-maquila autoparts) and national suppliers, since, on the one hand, the development of suppliers established in Mexico is based on corporate agreements established in the country

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where the TNCs originate and, on the other hand, national firms have scale, price, delivery deadline, productivity and technology problems (Altenburg et al., 1998; Carrillo & Gonzalez, 1999; Miker Palafox, 1996; Ram´ırez, 1997). Although subsidiaries of TNC firms are an important vehicle for the modernization and development of firms in Mexico, its transnational nature is also an important limitation for a more balanced relationship between foreign and national firms within regional development. The challenge is still great and needs more research and participation of all the stakeholders involved in this process. It is important to point out the impact that has had the NAFTA in this process. First, propitiated the arrival of FDI in form of assembly plants to the region. Second, fomented the vertical integration in most of the TV companies, mainly the Korean firm Samsung. Third, stimulated the arrival of foreign suppliers to the region – basically Asian. And fourth, propitiated the arrival and creation of small Mexican suppliers’. All this aspects has implied the increase of national inputs, as well as to strengthen the industrial clusters. However, this process has not concluded and has not been reflected yet in the official statistics of integration, neither in the local entrepreneur capacity. It is necessary the institutional environment so that this process consolidates and gives better results.

NOTES 1. This is associated with the product itself, which is highly capital-intensive. 2. Darlin (1996). 3. Darlin, Op. Cit, p. 112. 4. Interviewed in Tijuana, Enrique Mier and Teher´an, an industrial promoter, said the cost structure of a television’s value was 80% for cathode-ray tubes, 10% for cabinets and the rest corresponded to manual and automatic insertion. 22-01-2001. 5. The TV industry is part of electronic consumption and requires passive components (resistances, capacitors, switches, harnesses and cables, connectors, etc.) and active components (semiconductors, integrated circuits, microprocessors) (Dicken, 1986). 6. Original equipment manufacture. 7. The figure does not include sales to other electronic firms nor to firms in other branches. 8. According to one of the interviewed managers, “profits” derived from strengthening intra-TNC business benefit a firm’s top executives, which is why they are not highly motivated to develop outside suppliers. Since this statement is extremely sensitive, we are presenting it as an opinion only that needs future checking. 9. No cases have been heard yet of Mexican firms purchased by foreign suppliers: foreign firm Greenfield investments. 10. Although many of these services are hardly related to production, other services, such as customs agencies, are essential to distribute production. 11. In some cases, such as inter-maquila sales, the JIT system has been operating for more than 10 years.

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12. Since they manufacture CRTs, which represent 70% of the value of a television; any increase in production costs directly affects the price. If you add distribution costs (importsexports), you can understand the need to buy their inputs in NAFTA countries in order to enjoy tarrif exemptions. 13. This has been a general FDI pattern in Mexico since the 1990’s. For the car industry, see Carrillo and Gonzalez (1999). For the auto part industry, see Carrillo and Hinojoza (2003). For the computation industry, see Dussel (2003). 14. Purchase orders are placed mainly every 28 and 14 days. 15. An interviewee commented that although integration into IME had historically been low, there have been substantial changes, such as the inclusion of in-house products, which are not reflected in statistics. Television production is the best example of this: CRT production in Tijuana (70% of the product’s value), for example, should reflect in an increase in national integration, and it does not. 16. Interview with Mier and Teher´an (01-28-2001). 17. Monthly turnover was on average between 6 and 8% in 1995 in television assembly plants (Carrillo & Mortimore, 1998). In the year 2000, it increased to 13%, excepting Samsung (interviews with managers). 18. Sanctions before NAFTA were through applying differentiated tariffs to components made outside the U.S. and that did not belong to this country. 19. The articulation between the educational and productive sectors in Tijuana is characterized by various exchanges (personal and institutional links, agreements and courses and particularly agreements regarding student professional practice in plants) mainly based on informal relations Carrillo, 2001a; Hualde, 1999) which then to be highly individualized “between a plant and an educational center” (Hualde, 1999). Although there is an important degree of integration between both sectors, formal articulation is fragile since the education sector and the existing linking committees are located within the political dimension of the Mexican system of education, which belongs to a vertical political system (Hualde, 1999, p. 82). They are therefore very distant from not only business stakeholders, but also of the way TNC subsidiaries work in Tijuana. 20. Based on the need to comply with rules of origin since most firms in Tijuana are Asian, whereas most firms in Ju´arez are European. 21. Transport price and availability is much lower than in the USA. They are no longer forced to send their waste back to the U.S. as the maquila regime stipulates and do not risk being sanctioned nor infringing the law.

REFERENCES Altenburg, T. et al. (1998). Desarrollo y fomento de la subcontrataci´on industrial en M´exico. Berl´ın: Instituto Alem´an de Desarrollo. Barajas Escamilla, M. del Rocio (2000). Global production networks in an electronics industry: The case of the Tijuana-San Diego Binational region. Ph.D. Dissertation, Irvine: University of California. Carrillo, J. (2001a). Foreign direct investment and local linkages: Experiences and the role of policies. Project: Special business survey on linkages between local firms and foreign affiliates of TNCs 2000–2001, Tijuana (report).

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Carrillo, J. (Coordinator) (2001b). Mercados de Trabajo en la Industria Maquiladora de Exportaci´on (2nd ed.). M´exico: Ed. Plaza y Vald´es y El Colegio de la Frontera Norte. Carrillo, J., & Gonzalez, S. (1999). Empresas automotrices alemanas en M´exico, Relaci´on clienteproveedor, Cuaderno del Trabajo 17, M´exico: Secretaria del Trabajo y Previsi´on Social, 172 pp. Carrillo, J., & Hinojoza, R. (2003). Cableando a Norteam´erica: La industria de los arneses automotrices. En car Contreras y Jorge Carrillo (coordinadores), Hecho en Norteam´erica. Cinco estudios sobre la integraci´on industrial en Am´erica del Norte (pp. 70–104), Ed. Cal y Arena/COLSON, M´exico. Carrillo, J., Miker, M., & Morales, J. (2001). Empresarios y redes locales: Autopartes y confecci´on en el norte de M´exico. M´exico: Ed. Plaza y Vald´ez y UACJ, http://www.uacj.mx/ Publicaciones/MasInformacion/Redes.htm. Carrillo, J., & Mortimore, M. (1998). Competitividad en la industria de los televisores en M´exico: Del ensamble tradicional a la formaci´on de clusters. Revista Latinoamericana de Estudios del Trabajo (Vol. 6, pp. 79–100). ALAST, Campinas. Carrillo, J., & Santiba˜nez, J. (2001). La Rotaci´on de personal en las maquiladoras. M´exico: Ed. Plaza y Vald´es y El Colegio de la Frontera Norte (2nd ed.) Contreras, O. (2000). Empresas globales, actores locales: Producci´on flexible y aprendizaje industrial en las maquiladoras. M´exico: El Colegio de M´exico. Contreras, O., & Carrillo, J. (2000). “Comercio Electr´oico e Integraci´on Regional.. El Caso de la Industria del Televisor en el Norte de M´exico”, Ponencia.??? (c´omo quedan las ponencias). Contreras, O., & Kenney, M. (2000). Agents of change: Mexican managers in the Maquiladoras, University of California, Davis-El Colegio de Sonora (Inedit) (d´onde se imprimio). Darlin, D. (1996, May 6). Maquiladora-ville. Forbes, 111–112. Dicken, P. (1986). Global shift. Industrial in a turbulent world. London: Harper & Row. Dussel Peters, E. (2003). La industria electronica en M´exico y Jalisco (1990–2002). In: Dussel-Peters, Placios-Lara & Woo-G´omez (Eds), La Industria Electr´onica en M´exico: Problem´atica, Perspectivas y Propuestas, Universidad de Guadalajara, Guadalajara. Hualde, A. (1999). Aprendizaje industrial en la frontera norte de M´exico: la articulaci´on entre el sistema educativo y el sistema productivo maquilador, Cuaderno del Trabajo 16. M´exico: Secretar´ıa del Trabajo y Previsi´on Social. Lara Rivero, A. (1998). Aprendizaje Tecnol´ogico y Mercado de Trabajo en las Maquiladoras ´ Japonesas. M´exico: Miguel Angel Porr´ua-UAM Xochimilco. Miker Palafox, M. C. (1996). Las estrategias de articulaci´on productiva de las plantas suministradoras de Ford en el norte de M´exico. Tesis (Maestr´ıa en Desarrollo Regional). El Colegio de la Frontera Norte, Tijuana, septiembre. 160 pp. Ram´ırez, J. C. (1997). Los modelos de organizaci´on de las industrias de exportaci´on en M´exico. Comercio Exterior, 47(1), 470–498. M´exico, enero.

EFFECTS OF THE GLOBALIZATION ON THE WORKERS OF THE ELECTRONICS CLUSTER ´ IN JALISCO, MEXICO Raquel Edith Partida Rocha ABSTRACT The purpose of this document is to show the effects of globalization on the workers of the electronics cluster in the state of Jalisco. It begins with the assumption that the globalization has impacted the interests of the workers in their working conditions and created the precarization of workers. The text is divided in three sections: the first section presents the characteristics of the electronics cluster; the second section outlines a profile of the workers of this industry, and the last one presents the results of the precarization of work.

INTRODUCTION The purpose of this paper is to present some of the effects caused by globalization on the workers of the electronics cluster, in one of the regions where the production of computer and telecommunication equipment has taken place in the western part of Mexico (Guadalajara, Jalisco). In this region the electronics cluster has been consolidated, and for this reason this paper analyzes some of the characteristics of the labor force and the transformations which have intensified

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the change in relation to the effects in the hiring ways and working conditions, among others. It starts from the assumption that the global variations have had a negative impact on the labor conditions of the workers of the electronics cluster in Jalisco. As it is known Mexico entered the international economic opening with the signing of the North American Free Trade Agreement (NAFTA), that without a doubt favored the country by integrating it into the globalization of the economy, and with it, into a new model of industrial and labor organization that is determined by two great trends: a growing productive flexibility and the market links (Dussel, 1999, p. 61). These global changes generate a series of regional and local impacts that have taken place at a business as well as a worker level. In the first one, identification of substantial organizational and labor transformations, for instance: (a) moving from a mass production to the flexible production; (b) the rising of a crisis in big companies and the flexibility of small firms; (c) rising of new managing methods; (d) creation of multidirectional networks applied by small and medium-sized companies and the production model based on franchizing and subcontracting; (e) links between big companies or strategic alliances; and (f) rising of the horizontal company and global business networks (Castells, 1997, pp. 184–192). In the second, working conditions and labor relations have changed drastically with globalization, since there is a drop in the formal and regular employment, giving place to the creation of several strategies of survival like flexibility and part-time hiring. Similarly, there is a drop in opportunities for full-time, well-paid jobs and a change in the labor relations as Olmedo and Murrai point out (2002). The restructuring of the world economy has generated a rapid growth of the precarious and exclusionary conditions of the work in companies. In fact, some of the preliminary results of the “Encuesta de los Trabajadores de la Industria Electr´onica” (Survey to the Workers of the Electronics Industry) are presented here. This survey was conducted during the last months of 2002 and beginning of 2003 in the electronics cluster, in the state of Jalisco. 440 workers (from an approximate universe of 50,000) were given a questionnaire. This study is designed basically to assess production line workers, with the intention of estimating the characteristics of the labor force of the electronics cluster. In addition to labor relations, working conditions, recruiting models, it reflects some of the social issues the workers present, for instance: the lack of social benefits like day care centers that somehow, speak of an exclusionary and precarious labor in this sector. This study to electronics workers was applied in five company categories from the electronics cluster in Jalisco: Original Equipment Manufacturer (OEM); Contracted Manufacturing (CM); Electronics Manufacturing Services (EMS),

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Auxiliary Materials Supplier (SS); and finally Original Regional Equipment Manufacturer (OREM). The strategy used was interviewing the workers directly with a 70-question questionnaire distributed in seven variables: sociodemografic and socioeconomic profile, family situation, labor context, subcontracted work, labor health, household and water. Consequently this text presents only some of the results of the aforementioned project starting with the following question, which are the direct effects of globalization on the workers of the electronics cluster in Jalisco? Starting from the assumption that the globalization has set flexibility in the way contracting is done, based on temporary relations with individual contracts, shifts of more than eight hours per day, loss of union affiliation, subcontracting done through Employment Agencies (EA) that have contributed to some extent to the growth of the precariousness of work. Today unions subject themselves to the policies of the companies which exclude collective labor contracts; there is a partial or total separation of the union members, along with a passive attitude to current productive requirements. The union bureaucracy has surrendered the control of the labor force to plant managers in favor of the impositions of the investors, because there is a political pact to support new investment capitals in computer electronics. EA’s play a fundamental role in today’s labor market, since they are responsible for supplying the personnel, but also, they in charge of gathering and sorting the labor force for different tasks: operators, clerks, supervisors, janitors, etc. This model is ideal without a doubt, since it gives the plants freedom to hire and terminate workers according to the needs of each company, because the high flexibility demanded by this sector at international level, requires of flexible conditions in the region’s labor market, to be able to compete with low wages and flexible working conditions. As Kartchevsky and Caire point out, there is no doubt that these employment agencies, reconfigured the labor market in the region (Kartchevsky & Caire, 1999). This document is divided in three sections; the first section presents the characteristics of the electronics cluster in Jalisco; the second describes the electronics workers; the third shows the precariousness of work and labor relations, finally the global conclusion of the text.

THE ELECTRONICS CLUSTER IN JALISCO The electronics cluster in Jalisco was established during the 1970s, with the promotion of the computer and telecommunications industry that started to operate under the imports substitution model. The industry is characterized as closed and oriented mainly to the production of parts and components. As Warman (1994)

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indicates, in a first period, only the final phases of production are achieved, which were not necessarily the most profitable or with the greatest more added value. It was supposed that the forces of the market would generate the structuring of the productive chains, but this resulted in an electronic industry with errors and inefficiency at the terminal plant (Warman, 1994, p. 420). Indeed, the electronics of that period stood out for the activity in the fields telecommunications and computers, a process similar to that of the northern border region, that since the 1960s (1965) followed the industrial model of Export Maquiladora (Assembly plant – ME) specialized in the production of consumer goods like televisions, radios, VCRs, tape recorders, additionally to some components for the automotive industry (Carrillo et al., 1999; Contreras, 2001).1 In that first stage the maquiladora industry became a significant source of revenue and employment, benefiting the growth of exports and allowing Jalisco to reach a considerable participation in this activity. Later on, a strong presence of transnational companies takes place with final and intermediate manufacturing processes. These companies export most of the production and do not operate under the maquila model; instead they operate under the shelter of one of the numerous options the Mexican legislation offers. These companies had little linking with the local economy and a low degree of domestic integration. The trade opening of the country begins with the signing by Mexico of the General Agreement on Tariffs and Trade (GATT). The model undergoes fundamental changes and the economy opens up. A wide activity in the computer industry begins in Jalisco with the introduction of IBM in the production of computers. At a world scale an expansion in the use of personal computers takes place and begins the use of fiber optic and digital networks with integrated services (the link between computers and telecommunications). With the entrance of IBM in software, the state economy is dedicated to the exports of this sector. The electronics manufacturers cease searching and consolidating domestic suppliers, to be linked to the import and export under a model that, without being legally assembly plants, made them very similar to the latter in their production plants (Warman, 1994, p. 405) (Map 1). Since then, we can speak at least three generations of electronics companies in the state.2 The first is identified with a period of imports substitution (previously mentioned by Warman) that is characterized by lacking a direct relationship with the exporting market; in principle, these are small companies. Although at the end of the 1960s, arrive the first maquila plants in the region, with companies like Burroughs and Motorola. Then, in the 1970s General Instruments, Siemens, Kodak and IBM arrive. The second period is identified in the 1980s, with the first electronics companies specialized in computers. It begins in 1982, with HP and is consolidated in 1985,

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Map 1. Location of Jalisco.

when IBM decides to manufacture computers. Then, with the same objective, Bourroghs and Sperry merged with Unisys. This in turn, associates with domestic investors and the firm Compubur comes to life in 1989. In those years Tandem is founded, and few years before, in 1986, Wang arrives. Soon after, the first input supplying companies like Adetec, Cherokee, Pantera, Molex, Encitel and Nelsein Manufacturing are established, in addition to Mitel and Nec from the telecommunications segment. Similarly, some small and medium-sized companies are established with domestic capital like Logix, Electron and Mexitel. The third generation of electronics plants appears by mid-1990s. It is characterized by the arrival of suppliers of computing equipment like: Solectron, Compuworld, Cumex, IEP, Interelec, Natsteel, Phoenix, Tral, Jabil Electronics, among others. In this stage the development of an important software industry is achieved, with Mexaltec, Dovatron, Adatsa, Compucampo, Compac and Computaci´on en Accion. Similarly, the telecommunications industry is fostered, as with Philips and pagers companies like Quest.

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Table 1. OEMs in Jalisco. Company

Category

Origin of Capital

Year

Products

HP IBM Kodak

OEM OEM OEM

USA USA USA

1982 1975 1970

Siemens

OEM

Germany

1962

Printers and computers Thinkpad laptops Printers, scanners photographic film and cameras of a single USE Motors, boards, low tension equipment

Total

4

Source: The author based on the results of the research project.

It was in this third generation that the idea of the electronics cluster electronics is born, and that according to one of the institutions that promoted this model, it is structured around five categories: One of them, is the OEMs which are transnational or subsidiary companies that are leader firms (usually includes local and foreign suppliers). The world market of computers includes companies like IBM, HP, Siemens, Kodak, their main function being the final assembly of equipment (CADELEC, February 20, 2002) (Table 1). The following group is the CM’s, which is manufacturing by contract, this is, companies that assemble electronic equipment, on behalf of a OEM client, stamping the equipment with the OEM’s brand name and design. It is made up by a wide range of productive functions (Luthjer, 2003, p. 63). These plants have played the main role in Jalisco in the electronics boom and they favored the consolidation Table 2. CMs in the Electronics Cluster in Jalisco. Company

Category

Origin of Capital

Year

Products

Flextronics

CMS

USA

1997

Jabil

CMS

USA

1997

Sanmina-SCI Solectron

CMS CMS

Korea USA

2002 1997

PCB-cables Protusion PCB assembly & manufacturing Direct fulfillment Systems assembly Technology services Encloruses-EMS Manufacturing of printers-cellular phones assembly packing

Total

4

Source: The author based on the results of the research project.

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of the cluster and basically they appear at the end of the 1990s. It is mainly companies with American capital, like Solectron, Flextronics, Sanmina-SCI, as seen in Table 2. The third category, EMS – suppliers of inputs or manufacturing services – is related with computer and telecommunications companies like Mti, Pemstar, Usi, Yamaver and Telect; which have also a robust presence at the end of the 1990s. As it can be observed in Table 3 there is a significant participation of North American capital. There is a fourth category in this cluster in Jalisco, it is the support suppliers (SS). These are devoted basically to offer the materials for the operation of Table 3. EMs in Jalisco’s Electronics Cluster. Company

Category

Origin of Capital

Year

Products

Adelsa Caspem Cherokee Chomerics Parker Digital Power/Ecuaria Hitachi Lodan

EMS EMS EMS EMS EMS

USA Mexico USA USA EUA/Singapure

2002

Semiconductors and PCB

1992 2000

Power sources Electromagnetic interferences Power sources

EMS EMS

Japan USA

2003 2000

Mem

EMS

Mexicor Modusmedia International

EMS EMS

MEX-Spain USA

1998 2001

Molex Multek Pantera Pemstar SCG Sumida (formerly CP Claire) Tech Group USI VOGT

CMS EMS EMS EMS EMS EMS

USA USA Mexico USA USA Japan

1989 1989 1994 1987 2002

Hard disk drives Fiber Optic cables and connectors Assembly and mounting of electro-mechanic assemblies, cables and harnesses Assembly of electronic circuits CDR duplication, diskette replication, assembly, fulfillment and supply chain management Assembly of electronic circuits PCB Harnesses and cables PCB assembly Transistors and product retifiers Inductors Power sources

EMS EMS EMS

Taiwan Germany

2001 1997

Total

18

Source: The author based on the results of the research project.

Assemble SMT PCB

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Table 4. SS in the Electronics Cluster in Jalisco. Company

Category

Origin of Capital

Year

Products

Antiestatic Bradford Brands Electro Empaques Diga

SS SS SS SS

M´exico USA Scotland M´exico

1998 1994 2000 1999

FCD Maquiser

SS SS

USA Mexico

1991

Matecmex/Altetec Microempaques Sales Link Scientific Servi Altec Tech Group

SS SS SS SS SS SS

Mexico Mexico

1989

Production of packings Production of antistatic packings Plastic and labels Packings with self-adhesive foams in rolls, boards and pieces Packaging solutions Production of assembly equipment, on-line equipment fitting Labels Boxes and cardboard packings CDS and DVD and accessories

Taiwan Mexico

1997 1989

Triquest United Plastic USCO Yamaver

SS SS SS SS

USA USA USA Japan

1992 1999 1994 1996

Ureblock Grupo Kervo

SS SS

Ger-Mex

2002

Sub-total

18

Electronic labels Molds and electronic plastic products Plastic protrusion Resins and polypropilene Special packaging for exports Precision plastic parts, protrusion molds Minted of metallic parts

Source: The author based on the results of the research project.

manufacturing: from a cardboard box, to labels, including packaging and plastic protrusion molds, these are companies like Acostic Control, Estatec, Sistemas y Acessos Controlados. Usually these are suppliers’ companies. Like the following shows, an important number of companies were identified, around 18 (Table 4). Finally the OERMs are companies of regional capital that manufacture original equipment like Btc, Gpi Mexibal and Atr which assemble computers, produce capacitors, design power sources, among others, as shown in the Table 5. It is important to highlight that during the second half of the 1990s many CM, EMS and SS firms were established in the cluster of Jalisco. According to data from the last census taken by the National Institute of Geography and Statistics (INEGI), the electronics and software industry in Jalisco, contributes at a national level with 32% of the added value (see Graph 1), this is, it achieves an important figure in investment. Similarly, it contributes employing 94% of all the personnel contacted by the whole computer industry in the country.

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Table 5. OERM in the Electronics Cluster in Jalisco. Company

Category

Origin of Capital

Year

Products

GPI BTC Mexibaal ATR

OEMR OEMR OEMR OEMR

Mexico

1994

Measuring and control systems

Mexico

2002

Design of microprocessors

Sub-total

4

Source: The author based on the results of the research project.

In this period, the electronics in Jalisco has also a high exporting potential of products like boards, answering machines, PC servers, assemblies, circuits, telephones, suppressors, electronic cables, plastic parts, that have been diversified and potentiated to the global market through the programs to promote exports like the Program for Highly Exporting Companies (ALTEX) and the Program of Temporary Import for the Export (PITEX). This was without a doubt an effort of the Federal and state governments3 that created and fostered institutions, official and private agencies for the promotion and support of the companies in this field. The signing of the NAFTA increased considerably the activity of electronics in Jalisco, since the big players in the trade are favored by the purchases of the public sector and the accelerated reduction of duties in some items, specially finished equipment, therefore at a local level only parts for final equipment are produced.4 It is necessary to remember that one of the main objectives of the program of economic development has been oriented to promote the exporting sector, at a national level as well as local, to achieve the process of transferring the globalization, and without a doubt a factor that has been decisive for this development are the workers.

Graph 1. Computer and Telecommunications Industry in Mexico. Source: Data from the Economic Censuses 1999. 1998 data. INEGI. Report for class 382302 Production, assembly and repair of data processing machinery and 383201 Production, assembly and repair of equipment and devices for communication, transmission and signaling http://www.inegi.gob.mx/.

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THE WORKERS OF THE ELECTRONICS CLUSTER According to official statistics the electronics labor force was made up – in office machinery and data processing – in 1993 by 2,617 employees (according to a sample of eight industries); five years later (in 1998) the percentage grew fivefold, since almost 11,831 jobs were created. This increase is also observed in the production of electronic equipment; that same year 6,269 jobs were created, five years later this figure practically doubled to 11,701 jobs (see Graph 2). This increase in jobs coincides with the significant opening of electronics that took place in the period 1994–1998, time considered as the boom of the electronics industry in the region (INEGI, 1999) as it was pointed out by the National Chamber of the Electronics and Telecommunications Industry (CANIETI), which affiliates 119 macro companies and after losing jobs has today approximately 75,000 jobs (2001). At the moment, this Chamber has around 90 affiliated companies, 50 of which are directly or indirectly related with the computer industry. Indeed, the results of the economic recession had different impacts on different branches of the state economic activity depending on the behavior of the demand, the composition of the domestic productive plant vs. international competition, the appreciation of the wages, among others. For example, the semiconductors and computer industry was no longer the best paid in the region and went back to the third position although the other productive sectors also reduced their wages in key positions. Today, this industry has closed several plants and terminated more than eight thousand employees (10% of the labor force) impacted mainly by the economic deceleration of the USA. Today in terms of wages the pharmaceutical, metal-mechanical, and foods industries are ahead this industry. Indeed, the recessive trend presented by the macroeconomic indicators, is directly expressed in the levels of jobs, as shown in Chart 1.

Graph 2. Personnel Employed by the Electronics Cluster in Jalisco 1993–2003.

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Chart 1. Computer Industry – Employed Personnel (Monthly Average). Class 382302 Manufacturing assembly and repair of data processing machinery Employees Workers 383201 Manufacturing, assembly and repair of equipment and devices for communication, transmission and signaling Employees Workers Total

1996

1997

1998

1999

2000/p

2001 (Jun)

8,63

12,07

13,74

14,69

16,23

15,760

5,72 2,91 2,54

8,14 3,92 3,26

9,49 4,25 3,35

9,86 4,84 3,12

10,82 5,41 3,1

10,160 5,600 3,020

1,33 1,21

1,56 1,70

1,67 1,68

1,62 1,51

1,51 1,59

1,430 1,600

11,17

15,33

17,09

17,82

19,33

18,780

Note: p/Preliminary figures from the indicated date. Source: Indicators of the Monthly Industrial Survey by Division and Class of Economic Activity. Absolute figures. INEGI database www.inegi.gob.mx.

According to the figures of this chart the personnel, occupied in the aforementioned categories kept a constant increase between 1996 and 2000, representing an accrued growth of 73%. However, in 2001 the variation was negative, this is, there was a decrease in the number of positions in both types of activity. The data allow seeing that the category of employees is the one that indeed presents a decrease, while the number of workers remains practically constant. At the moment (2003), the electronics industry employees almost 25,300 workers. According to the “First Survey of the Electronics Industry in Jalisco” the characteristics of the workers in the cluster are the following: 62.2% are women, 35.1% of the positions are for men, showing a decrease in the trend of jobs for women. The study also revealed that 38.7% of the operators of this cluster finished secondary education, 13.4% finished high school, and 11.5% of the workers finished elementary education. Interestingly enough, only 63.3% of the operators have this educational level, but 76% of those interviewed reported having labor experience before working in an electronics plant, 45.5% pointed out that they had already worked before in the manufacturing industry – other electronics plant, textile, footwear, just to mention a few. This same survey reports that approximately 40% receives a weekly salary ranging between 40 and 60 U.S. dollars. In general terms the daily salary is 59.00 pesos (approximately 5.90US), with eight hours per shift, plus the time to commute from the place of work to the home, which represents between one and two hours everyday for 92% of the workers. Although 35.5% is taken by company-owned

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Chart 2. Transportation of Workers of the Electronics Cluster. Type of Transportation Company’s transportation Urban transportation Urban and company Walking N/A Total

Percentage 35.5 34.8 18.8 4.2 7.7 100.0

Source: The author based on the results of the research project.

vehicles, while 34.8% takes urban transportation and 18.8% uses both means of transportation, as is shown in the following chart (Chart 2). The antiquity, 38.8% of the workers interviewed has worked more than eighteen months while 24% has worked between one and three months. An interesting fact is that 62.6% points out to have a definitive position and only 35.1% considers it temporary. As to the signing of contracts, 84.7% of these are individual contracts for a specific service or work and only 5.1% indicated having a collective contract. 94% mentioned there was Social Security and 43.5% mentioned receiving a profit share, and 36.4% is entitled to vacations. One of the social benefits that reflected a low figure was the day care centers for the children of the workers, with 4.8%. Also 73.8% is not affiliated to a union and 11.5% was not aware if they belonged to a workers organization. As it is shown there are new labor relations and conditions that have been promoted by globalization where precarious work is extended and deepened, understanding this as the responsibility, exercized under inconsistent (or insufficient) conditions to guarantee the worker’s survival, at minimally acceptable levels (Sotelo, 1999, pp. 125–126) and that in the practice it means the deterioration of the quality of the employment through the spreading of the underemployment, the limitless continuation of labor shifts and the deterioration of the labor rights.

PRECARIZATION IN THE LABOR RELATIONS IN THE WORKERS OF THE ELECTRONICS CLUSTER The precarization of the labor relations in the electronics cluster can be analyzed in two levels. In the first, the problem is the indirect hiring of workers through a third party or EA. In general terms the electronics cluster is made by up by companies that establish no direct links with the workers, because they get them

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Chart 3. Benefits of Subcontracted Workers of the Electronics Cluster in Jalisco. Type of Benefit Social security Vacation Profit share Tenure Christmas bonus Pension and retirement Child care

Percentage 97.7 34.4 27.5 6.8 6.8 5.7 4.5

Source: The author based on the results of the research project.

through subcontractors, better known in the trade as outsourcing agencies. 32% of the workers studied pointed out that they were hired under this system; 97.7% said they had Social Security; 34.4% said they had vacations, also 27.5% indicated that they were paid the profit share, of those subcontracted 4.5% mentioned they had their children in day care centers, as shown in Chart 3. As to the educational level of subcontracted workers and their labor experience 49.4% finished secondary school, 18.3% completed high school, meeting the general results of the survey. The interesting fact is that 81.6% explained that it was not their first job; they already had labor experience: 54% in factories, either from the electronics industry or from another productive branch. Another important fact is that 31% of the subcontracted workers learned of a job offered by EAs through relatives and friends, continuing with the same subcontracting agency 28.7%. 98.8% expressed that they were sent to more than one company. Also, 35.5% explained that the EA renewed their contracts every three months, and 59.7% that the manager of the EA is the one who pays inside the facilities of same company. The subcontracted workers pointed out the existence of differences between subcontracted workers and tenured workers: 34.4% of the subcontracted workers said that tenured workers have more stability in their jobs, and 21.8% that they are paid their Christmas bonus, 20.6% also expressed that tenured workers create seniority, while only 3.4% the subcontracted were affiliated to a union and 81.6% pointed out that they were not, and 13.7% expressed they did not know whether they affiliated to a workers union. 93.1% of the subcontracted workers indicated they had individual contracts and only 4.3% said they had collective contracts. In 53% of the answers the term of the contract ranges from one to three months, in 1.4% more than four months and up to six months, in 5.2% seven months to one year, and only 1.4% said they had contracts for more than one year. The above-mentioned shows the precarization of the labor relation,

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because these are unstable jobs with minimum benefits and zero participation of unions. Actually, the companies of the electronics cluster indicated that the subcontracted workers have no unions, work with no collective contracts, that they have had no strikes or labor conflicts, since the EAs are in charge of controling and managing the human resources area and the company is dedicated exclusively to the production. The subcontracting model assures an abundant, controled labor force that generates no labor conflicts. There is a clear rejection against conflicts and an important number of union organizations – traditional and subordinate – are characterized by their conciliatory policies (Quintero, 2001, p. 168). With the globalization, the policy of the State of Jalisco plays a more significant role with the business organizations and less important with the unions. New strategies take place through new social players like the lawyers that represent the interests of the transnational capital and the new middlemen between capital and work. For instance, these counsel computer transnational companies to select suitable unions, to sign a collective or protection contract. They select unions that cause no problems to the companies. They seek unions that only charge an amount and cause no conflicts, also that workers do not request too many salary increases, that do not seek to improve labor conditions like day care centers, dining room, better transportation routes or food coupons. In summary, the electronics companies seek union organizations subordinated to the interests of the capital. A typical example of this type of subcontracted work is IBM plant in Jalisco; only 5% of the 10 thousand workers has a direct contract, the rest is subcontracted. Without a doubt, this reconstitution of the State and the unions allow the appearance of the EAs, creating social problems that have not been met like the lack of the day care centers for the workers’ children.

CONCLUSION From what was presented the following conclusions can be reached. Firstly, the restructuring and globalization processes made more subordinated the unions in the state of Jalisco and this has resulted in the creation of EAs, and this in turn guarantees to some extent the stability of the labor market, but at the cost of uncertain labor relations. Secondly, in addition to the above, there are new players that participate and break with the tradition of capital and work, like labor lawyers that assure stable and subordinated relations. On the other hand, an element that has spiced up the environment is a non written agreement between the unions to respect each other’s affiliates. Something that must be pointed out is that the presence of EAs is permitted by the unions, since they are affiliated

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to a labor organization. These are the new labor relations that take place with globalization. It is recognized that these companies have created jobs thanks to important investments in the region through maquila plants, but with uncertain conditions in the work, low salaries, and social effects that have brought to region severe problems in the short and medium term. In general terms it seems that these companies are concerned for the worker based on the creation of profits, forgetting there is a human being, and that they are to meet other needs for a better work. It was also possible to describe the changes of the electronics cluster classified in a typology of industries and companies where the survey was applied to assess in each of the levels the composition of the workers to achieve a better panorama of the labor market of this cluster. It is important to emphasize the fact that there is no attention for the children of workers on the part of the State, unions or companies, they all have been negligent, there is not a single day care center for the children of workers of the electronics industry in the city. The above-mentioned, instead of promoting the development of egalitarian societies, seems to create a resented society, that instead of being grateful for the efforts to create employments.

NOTES 1. During the 1970s the maquila activity was authorized to be established in all the country, additionally to the northern region, in states that begin with a model of maquila exports (Palacios, 2001, p. 461), as in the cases of Aguascalientes, Federal District, Puebla, Yucatan and Jalisco; and, recently (final years of the 1980’s and in the 1990’s) in Campeche, Durango, Guanajuato, Sinaloa and Zacatecas. These companies have focused mainly on the maquila of garments, food-canning, footwear, furniture, chemical products, toys, automotive parts and electronic products. It can be said that the logics of installation is non bordering ME (nbME) and bordering ME (MEF). 2. Jalisco has specialized in the production of electronic equipment for computers and telecommunications, particularly in the production of components – resistors, semiconductors, capacitors, integrated circuits, switches, microprocessors, cables and connectors – computers, peripherals and telecommunication devices, mainly telephones and pagers. 3. At the end of the administration of President Jos´e L´opez Portillo, the assessment was that our country was importing too many computers, because the figures showed the following: in 1968 equipment worth 10 million dollars was imported; in 1970 the figure was duplicated; between 1976 and 1978 it grew fourfold and fivefold. 98% of the purchases of this equipment was done through leasing, representing an important flight of capital through the Mexican public expense, so it was devized to create an area that produced computers for domestic consumption mainly, and then for foreign sales (Diagnostico de la Informatica en Mexico, Secretaria of Programacion y Presupuesto, 1980).

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4. On the other hand, the electronics industry encompasses large and medium-sized companies. In the case of the former, those that prevail, they have been able to grow and to consolidate in Jalisco. The electronics is also synonymous of transnational, since in Jalisco there are no large companies from domestic capital, only few medium-sized domestic companies. In the case of small companies, some manufacture machinery, but most of them have focused on the trade, import and reselling of equipment.

REFERENCES Cadena Productiva de la Electr´onica (2002). Guadalajara, Jal. C´amara Nacional de la Industria Electr´onica, Telecomunicaciones e Inform´atica (2001). Guadalajara, Jal. Carrillo, J., Mortimore, M., & Alonso, J. (1999). Competitividad y mercado de trabajo, empresas de autopartes y televisores en Mexico. UAM-Plaza y Valdes, M´exico, DF. Castells, M. (1997). La era de la informaci´on. Econom´ıa, sociedad y cultura. Tomo I. Alianza Editorial, Madrid, Espa˜na. Contreras, O. (2001). Comercio e integraci´on regional: El caso de la industria del televisor en el del Trabajo y Previsi´on Social-CEPAL-EL Colegio de la Frontera Norte. Tijuana, B.C. Diagn´ostico de la Inform´atica en M´exico, Secretar´ıa de Programaci´on y Presupuesto (1980). M´exico, DF. Dussel, E. (1999). La subcontrataci´on como proceso de aprendizaje: El caso de la electr´onica en Jalisco (M´exico) en la d´ecada de los noventa. CEPAL, Chile. Instituto Nacional de Estad´ıstica, Geograf´ıa e Inform´atica (1993–1999). Aguascalientes, Aguascalientes. Kartchevsky, A., & Caire, G. (1999). Les agences priv´ees de placement et le marche du travail. L’Harmattan, Paris, Francia. Luthjer, B. (2003). Manufactura electr´onica por contrato: de producci´on global y la divisi´on internacional del trabajo en la era del Internet. In: La industria electr´onica en M´exico: problem´atica, perspectivas y propuestas (Coord.), Enrique Dussel Peters, Juan Jos´e Palacios y Guillermo Woo. UdeG. Guadalajara, Jal. Olmedo, C., & Murria, M. (2002). The formalization of Informal/Precarius Labor in Contempory Argentina. Revista International Sociology, 17(3) (September). Palacios, J. J. (2001). Production net works and industrial clustering in developing regions. Guadalajara, Jal., Universidad de Guadalajara. Quintero, C. (2001). Sindicatos en maquiladoras. De la concertaci´on a la colusi´on. In: Memoria de la Conferencia Internacional: Libre Comercio, integraci´on y el futuro de la industria maquiladora. Producci´on global y trabajadores locales. CEPAL-STPS-el Colegio de la Frontera Norte, M´exico, DF. Sotelo, A. (1999). Globalizaci´on y precariedad del Trabajo en M´exico. Ediciones El Caballito, M´exico, DF. Warman, J. (1994). La competitividad de la industria electr´onica: situaci´on y perspectiva. En: La industria Mexicana en el Mercado Mundial (Coord.), Fernando Clavijero y Jospe Casar, FCE, M´exico, DF. www.inegi.gob.mx.

INDUSTRIES AND SERVICES. GLOBAL NETWORKS AND CHAINS

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NEW DEALS IN GAMBLING: GLOBAL MARKETS AND LOCAL REGIMES OF REGULATION Terry Austrin and Jackie West ABSTRACT The legalization of gambling is moving this once deviant sector into the mainstream of commercial entertainment, with the global hotel-casino increasingly adopted as a state initiative on economic redevelopment. But corporate capitalist interests do not result in universal trends since local regulatory frameworks are crucial. Although gambling is being normalized as mass consumption, it remains to some extent an exceptional business, subject both to global innovation in the technology of surveillance and variable local controls. The paper argues that the effects of glocalization on the organization of work are equally variable, drawing on fieldwork and case studies from the USA, Australasia and the U.K.

INTRODUCTION The legalization of commercial gambling, the normalization of a once pariah sector, is taking place in an irregular fashion in different social settings. Once considered peripheral, it has now moved to a much more central position within a number of societies. However, the interests of corporate capital do not result in universalizing

Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 143–158 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13008-2

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global trends since local regulatory frameworks remain crucial and the implications for workers in this service sector are diverse. Changes in the organization of gambling and the work entailed are poorly understood by prevailing paradigms in social science. While once the focus was on deviant occupations (the classic example being Polsky, 1967), recent attention has marginalized “other professionals” in favour of a focus on consumption, important though this is. The pathological gambler has replaced the professional punter/hustler and workers in legal gambling have been largely ignored. Here we seek to redress this imbalance. Using the example of casinos, we highlight differences in the way that national states together with markets and both global and local cross-cutting networks construct these key components of the “night-time economy” (Hobbs et al., 2000). Legalization of gambling has been prompted by two main developments, political and economic. Firstly, older repressive models have been displaced by the view that state control and public benefit can be better secured by 1icensing than criminalization. Licensing establishes a legal taxation regime and a regulatory regime empowered to inspect operations along, in some cases, with formal recognition of problem gambling as in need of support. But gambling remains to some extent exceptional rather than fully normal business. Public authorities (and these are always local) are directly implicated in legalization, and this does not change when protectionist or prohibitionist discourses are displaced by those which promote the interests of commercial entertainment and/or revenue generation. And corporate capital both shapes and adapts to these local political contexts. The exceptional nature of the industry is also compounded by local differences in the way that markets are organized, that is by more narrowly economic forces, played out at the local level. Local differences remain significant but are even in some respects accentuated through regulatory practices which govern, for example, numbers of operations and zoning. Simultaneously these differences are increasingly undermined by illegal operators and by technological and organizational innovations that extend the boundaries of markets beyond the scope of local jurisdictions. These include gaming machines, telephone betting, internet gambling and interactive television. These innovations are themselves fostered by the other politico-economic “logic” promoting legalization, namely emergent state interests in the role of entertainment as a tool for economic development and/or fiscal revenues. Gambling is increasingly accepted as popular leisure for both men and women, along with the marketing of new products. And it is through the medium of the hotel-casino – which epitomizes these developments – that a routinized labor process is established, subject to state control. The tension between global and local tendencies in shaping markets is generally understood as a generic function of mobility flows of persons, things and images

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(Appadurai, 1990; Nederveen Pieterse, 1995; Robertson, 1995). However, the case of gambling shows that it is the specific framework of the nation/state which affects the form within which these flows are manifest. Global developments in gambling are illustrated by the growth of the hotel-casino as part of various state initiatives on tourism and the redevelopment of local economies. But indigenization (Appadurai, 1990) and glocalization (Robertson, 1995) are equally apparent in the forms that these initiatives take, on account of the specific role of state conditions for legalization. Our argument is developed using case studies from the USA, Australasia and the U.K.1 But we begin by highlighting general tendencies in the labor process of casino gambling as it shifts from an elite to mass social form.

CASINOS AS SITES OF CONSUMPTION AND WORK: NETWORKS AND CONTROL Contemporary accounts of casino gambling emphasize the flattening of cultural hierarchies that accompanies commodification and the creation of new sites of urban pleasure (Kingma, 1997; Reith, 1999; Ritzer, 1999). Where in Europe gambling was once sharply segmented, for example in the form of aristocratic or at least private clubs, working class lotteries and correspondingly distinct forms of betting, the new model casino pioneered in Nevada legitimates gambling for a mass market, including the middle class. Commercialization banishes both social exclusivity and the dark side of addiction in the name of fantasy, fun and frenetic action amongst crowds of strangers with 24-hour access to games, alcohol and credit. The casino, as space of desire and licence, epitomizes new forms of experiential consumption, but the casino workers are much less visible in these accounts except in so far as they contribute to this. The rituals of play at gaming tables are seen to preserve the past as tradition, with the dealer (or croupier), still dressed in formal uniform, as representative of the casino, despite the fact that electronic gaming machines are an increasingly dominant presence. The dealer and the table also provide a semblance of order in a labyrinth of confusion and a focus for the voyeuristic watching of players as well as staff. But while, for the gambler, the chips and cards are “inconsequential counters in a play world” (Reith, 1999, p. 148), for the dealer they remain simulated objects of great consequence that must be handled with considerable care. Heightened expectation and excitement for the gambler are routine action for the dealer, who remains subject to extraordinary controls. Accounts that focus on the rituals of consumption do recognize that state regulation is a condition for new market developments in gambling, but they are only implicitly concerned with the regulation of persons and things in work. For example, Kingma (1997,

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p. 174), using the Dutch example, suggests that the new “economy of pleasure” is legitimated through autonomous “gaming complexes” operating with their own regimes of regulation. These involve “differential combinations of the signification of gaming, market composition, time-spatial availability, techniques of production and mass marketing, and regulation varying from research, judicial supervision, policing and health care.” However, the condition of their legal operation in the Netherlands, is a strong state, not a weak one, even though the state no longer operates repressively. Moreover, the normalization of gambling as consumption does not replace the state’s concern with the potential deviance of operators or gamblers. The managers and inspectors, who scrutinize the work of dealers in casinos and who monitor punters through the scrutiny of machines, are themselves monitored by state officials (Austrin & Curtis, 1999). Once legalized, monitoring thus entails the direct involvement of government agents alongside private management. Indeed it is this dual system of control, or shared surveil1ance of the labor process, which “sanitizes” gambling and facilitates the integration of gaming companies into the global tourism and leisure industries.

From Craft to Simulation So the rituals of table games constitute far more than tradition or embodied display. Dealers deploy extensive skills, both discursive and embodied. In traditional European casinos the use of French is required, and in both these and in casinos modelled on them, as in the U.S. and Australasia, dealers continue to exercise particularly “exquisite” manual dexterity in handling chips (Lafferty & McMillen, 1989; Skolnick, 1978). But their ritualized moves, the repetition, regularity and visibility, delineate both work and hierarchical control. The ways in which croupiers deal cards are designed not only to prevent players from counting cards but also to prevent skilled dealers making illegal sleights of hand, thus cheating the player or the house, or colluding with players – that is they are designed to make the acceptance and payoff of all wagers visible to management. This surveillance is achieved through the detailed scripting of dealers’ ordinary moves so that deviations can be registered by astute observers (Skolnick, 1978). It is embodied in both the watchful eyes of inspectors and “pit bosses,” and also constant video recording. The spatial arrangement of the tables additional1y facilitates this surveillance, as do the technologies of chip design (to prevent counterfeits) and automatic shuffling of cards. Dealers, then, engage in acute bodily self-discipline in order to execute their role but their “exquisitely” performed rituals also allow others oversight of their own work and that of gamblers – oversight, that is, of the

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labor process of gambling (Austrin & West, 2003). For there is always scope for deceit precisely in the capacity to feign “how things should be done,” reflected in the fact that inspectors are generally recruited from among the table staff or even cheating punters. All workers on the gaming floor are perceived as potential criminals, in the legalized casino no less than in its illegal form. This real-time embodied surveillance of table games is, however, in the new casinos, currently being supplemented or even replaced by simulation in the form of gaming machines which involve the development of games across different sites and new forms of control including the electronic auditing of software. Machines now outnumber tables in casinos, taking up around 70% of floor space (Earley, 2001). Gaming machines have been identified as the crack cocaine of gambling by health professionals, but they also represent the archetypal repetitive production line for mass consumption. As Goodman (1995, p. 124) puts it, casinos are now “theme-decorated warehouses . . . the new McGambling . . . populated by what the gambling industry calls ‘grind players,’ a chentele who sit with plastic cups of coins, pulling levers and pushing buttons.” Equally significant, this new technology of programmed gaming machines makes it impossible to play a machine systematically and hence destroys gamblers’ capacity for strategy, that is the knowledge and skill of the gambler in the mediation of chance. Special software memory provides management with the means to trace rule-compliance and information on spend and turnover for the calculation of profit, while state inspectors audit the daily printout and the integrity of the memory itself (Crevelt et al., 1989). At the same time, gaming machines are essentially lotteries, blurring the distinction between table games and wagering (Austrin, 2002). Small time consumers become big time winners through their insertion into gaming networks that expand beyond the boundaries of individual casinos, and beyond casinos into clubs and pubs, and potentially the home. It is this that presents the possibility of the jackpot, an increase in winnings through linking the outcomes of discrete games. And while the gambler is being deskilled, the dealer is being replaced. Embodied games of skill, games of craft for both the dealer and the punter, are being transformed into disembodied games of chance, through the integration of information analysis, high-speed computation and communication. Technological innovation, then, is eliminating the manual labor process and its supervision, as gaming, simulation and networking allow users to interact directly with machines. As in retail, entertainment and finance generally, work becomes the job of hosting self-servicing customers/clients rather than engaging in activity/play with them (Knights & Tinker, 1997; Lash & Urry, 1994). Products are also reconfigured, through constant innovation. On the one hand table games such as roulette and blackjack are directly simulated on gaming machines. On

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the other, firms have the capacity to network games both within and between different sites, thus blurring distinctions between markets. In the case of roulette, for example, the game can be played in one of three ways: firstly as a discrete game, orchestrated by a dealer/croupier, on a single roulette table, secondly as a discrete machine game in which the croupier is displaced by an automatic spinning device and punters place bets through a computerized “pad,” and thirdly as a distributed video game in which punters place bets on a computerised, simulated table that is linked to a real-time game being conducted in the same casino or potentially in another casino.2 The latter form allows for the establishment of networked roulette games across terrestrial sites within a single firm and, by extension, to cyber casinos. This use of the internet makes both the games/products and the companies classic examples of networking innovations in business practices (Castells, 1996). However, legal gambling is additionally characterized by the processing and control of financial transactions, framed by a discourse of pleasure. This too has parallels with contemporary forms of banking and insurance. Transactions are secured in practice through procedures of regulation that target the possibilities of cheating by players but also employee faults, collusion between employees and customers, faults in machine programming and computer fraud. While controls in traditional casino gaming are exercised through an elaborate hierarchy of surveillance staffed by personnel who focus on the frontline exchanges of dealers and players (Lafferty & McMillen, 1989; Skolnick, 1978), control in complexes dominated by gaming machines entails the selective site and laboratory-based testing of computer programs and monitoring the behavior of players (Austrin & Curtis, 1999; Goodman, 1995). These developments in the labor process of gambling are tendential, however, and their manifestation in particular locales is variable. They testify to an increasingly global form of gambling in which the hotel-casino is not only emerging as an important commercial/cultural arrangement but is also being promoted by states interested in restructuring local economies through the introduction of tourist destinations. Yet this innovation increases rather than simply standardizes the range of local regulatory solutions in the political and economic domains (Nederveen Pieterse, 1995). Local contexts continue to exercise influence both because political interests play a crucial part in the legalization process, and also because – in part as a result of the legalized framework – gambling firms seek to “indigenize” (Appadurai, 1990) the global forms. Thus new “glocalized” markets (Robertson, 1995) are produced by this double process of indigenization, while they are simultaneously undermined by punters’ access to games available within global markets organized through the internet and other types of company-specific network.

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GLOCALIZED SETTINGS United States of America Gambling as normal business is epitomized by Las Vegas, now a world resort entertainment center run by corporate capital, in sharp contrast to older regimes (Parker, 1999; Rothman & Davis, 2002). Following the legalization of gambling in Nevada in 1931, Las Vegas was reinvented in the early post-war period (1946–1969) partly by a partnership of local politicians and national mob interests. Casinos were family-owned, racially discriminatory (blacks were barred from working as dealers and bar tenders and as customers) and local workers’ remuneration depended heavily on perks and privileges, tips and “juice.” Now, in a subsequent re-invention, it has become a multiple-shift location, run on “Fordist” lines and dominated by 12 industrialized, mass-market hotel-casino resorts each employing 6–8,000 workers, predominantly low skill waiters (the largest occupational category), maids, cleaners and casino dealers – an increasingly female labor force. Aside from dealers, many of these workers are well organized, in union-secured contracts providing “middle class” prosperity and a reputation as “the most dynamic union town in the country” (Rothman & Davis, 2002), notwithstanding the non-unionized, black unemployed of west Las Vegas and an earlier history of anti-union activity (Parker, 1999). The union in fact argues that it is a partner in the Las Vegas “entertainment revolution,” a development in which corporations are experimenting with gaming, mass media, digital tracking and surveillance alongside mainstream hospitality. Links between casinos, hotels and entertainment have been especially evident since Holiday Inns bought into the Nevada-based Harrah’s casino in the late 1970s. By the 1990s, MGM and the Hilton Hotel chain, for example, were also involved, and the Las Vegas strip hosted 17 of the largest world hotels (Earley, 2001). These developments in Las Vegas are also making its tourist areas some of the most effectively privately policed locales in the world. Additionally it is transforming the organization of work in casinos. On the one hand the introduction of professional management (Macomber, 1984) along with feminization (as in banking: Austrin, 1991; Smith, 1990) has ended the traditional career route for (male) dealers of moving up the hierarchy. Moreover, diversification, via electronic gaming machines and non-gambling activities in hotel-casinos, is creating a less specialized labor force of semiskilled leisure/service workers. On the other hand, following legal changes which allowed Nevada casino companies to campaign for legalized gambling in other U.S. states, cities and rural counties have adopted gambling as a development model with the number of casinos operating outside of Nevada increasing from 53 to 300 between 1989 and 1995 (Thompson, 2002,

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p. 360). Casinos and other forms of gambling are now reported to account for more than 4% of total revenues in many states (Berenson, 2003). This has created possibilities of horizontal mobility, in which new smaller “satellite” or branch casinos are used as training sites for lower level management. Women dealers are taking advantage of this as are men, and international careers are also opening up. This increased mobility of persons (Appadurai, 1990) is both the condition for and the consequence of the extension of electronic machine gaming as the dominant form in casino gambling. As casinos in the USA have developed outside of Nevada, the generation of their gaming revenues from electronic machines and other gaming devices has risen. In 1980, for example, Nevada’s table games accounted for 55.6% of Nevada’s total gaming win, but in 1998 for only 30.6%, while 65.3% came from gaming machines (Eadington, 1999). In Atlantic City, in the same year, the machine win was 70.1%. This shift towards gaming machines is even clearer in Colorado (with $5 wagering limits), where 94.5% was won by machines in 1998. As Eadington comments, this shift towards machine gaming in just two decades is dramatic. The concentration of casinos in Las Vegas is untypical, in both the U.S. and elsewhere. So too, the use of tipping as a form of remuneration and labor control (Sallaz, 2002) is confined to the USA and has not been adopted in other jurisdictions including those in Australasia. Nevertheless, the resort destination/hotel-casino complex is the critical form general1y adopted for tourism, even where only one casino is allowed, as is usual in U.S. cities, or perhaps three as in the urban center of Detroit. In the USA in the 1990s, for example, the development of casino gaming outside of Nevada mostly occurred in regimes that not only regulated the size, type, and number of casinos but also imposed zoning restrictions on location. Mississippi is the only other U.S. state to adopt a direct version of the Nevada model. Its casino industry has developed hotel-casino resorts in the two rural counties of Biloxi and Tunica.

Australasia Las Vegas is also the model – but only in some respects – for other local developments which promote gambling as entertainment linked to the international hospitality industry and global tourism. This form of “glocalization” (Robertson, 1995) is a central element of economic regionalism based upon the commercial regeneration of city centers. Las Vegas in the mid-20th century, like Monte Carlo 50 years before, was an impoverished region, on the border of states where casinos were illegal, and used gambling to raise taxes and advance economic development.

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Other governments have identified this solution to income-generation and laborintensive employment through tourism (Eadington, 1995). The same “logic” has been repeated in Australia, then New Zealand, Canada and more recently in the U.K. too. But the regulatory models which apply in these other jurisdictions produce, as they do in U.S. states outside of Nevada, different combinations of workers (front line gaming and restaurant staff and back of house maids), electronic gaming machines and union involvement. The gaming developments in Las Vegas entailed the licensing of unlimited casinos, which, in response to competition, have increasingly incorporated within them other forms of gambling such as horse and sports betting. In Australasia, by contrast, government regulation has produced protected monopoly markets for privately owned casinos, but in competition with other forms of gaming which are also state or private monopolies. This model was first deployed in Hobart, Tasmania, in 1973, followed by a second hotel-casino in Launceston in 1982. Since this was the maximum allowed under state law, the company running the two casinos was granted an effective monopoly in these two small centers. Both were required by a Casino Advisory Committee to licence employees, incorporate continuous video surveillance of table play and government on-site inspection. This Tasmanian package, followed next in the Northern Territories, also a peripheral state, was extended to urban centers in Australia and New Zealand. The Sydney casino was granted a 12-year monopoly in New South Wales, the Melbourne casino a six-year monopoly in Victoria. Auckland gained a monopoly in 1996 over the entire North Island of New Zealand for two years and a five-year monopoly within an area of 100 km (Austrin, 1998). The opening of the Auckland casino, and an earlier one in Christchurch in 1994, were live televized occasions that took on the form of affairs of state. The Auckland launch merged this state event with the worlds of television celebrities and sporting heroes, but on both occasions the justification was that casinos were a new industry which will create employment and assist in tourism and regional development. In Australasia this rhetoric of development has been characteristic of both casino owners and governments. Casino gaming has become simply another tourist market to cultivate. Nevertheless, this market has distinctive local features, in particular an Asian clientele. Indeed the Auckland casino, along with other casinos in New Zealand, is one of the only places where Asians, Maori and Europeans (Pakeha) come together in a single setting. These urban hotel-casinos are “body intensive” (Hobbs et al., 2000). For example, the Melbourne casino employs up to 3,500 and the Auckland casino up to 2,500. In this respect they appear to map Las Vegas, albeit on a smaller scale. However, there is a legislated ratio of tables: machines of 15:1 in New Zealand and Las Vegas developments such as automatic card shuffling have been rejected in favour of the retention of

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traditional dealer practices – older conventions of table gaming, not just machines, have been imported, with the result that casino workers include trained dealers not just machine attendants.3 At the same time, new state-sponsored deregulation has opened up the new local market to global operators with years of expertise. One consequence has been that casino firms originally established in Nevada and in England, where casinos had been legalized in 1960, were permitted to extend their global networks into New Zealand. For gaming employees these developments have facilitated their own careers. Connections between Australia and New Zealand have set up moves between the two countries and gaming staff recruited from the U.K. hold a significant presence in New Zealand casinos. A second consequence is that monopoly franchises in casinos, betting and lotteries are not only forced to compete against each other but also increasingly demand equalization of licensing conditions, particularly as new technologies promote expansionary opportunities. Here too the boundaries between historically distinct gambling institutions are being reworked. Casino operators have bought into betting firms and links between gambling and television companies have been developed. For example, tote operators broadcast local and global horse racing through negotiated arrangements with the global satellite TV company Sky, and Australasian state lotteries use prime-time slots on national TV. Interactive satellite gaming systems are currently being developed by Murdoch’s company, News Datacom, and a large number of dedicated gambling channels are forecast. Similarly it has become standard practice for sports betting and wagering on horses to be conducted through the internet.

The United Kingdom The rhetoric of casinos as development tools, along with the introduction of the Las Vegas hotel-casino, has recently emerged in the U.K. and is replacing the tradition of the small British urban “club” casino and the paternalistic policy of protecting players from the “seductions of gambling” (McMillen, 1996). The legalization of gaming in 1960 effectively decriminalized the existing illegal gaming clubs, and facilitated the unlimited growth of small table gaming casinos throughout Britain. In 1968, the establishment of a national gaming board endorsed the principle that there should be only sufficient casinos as will satisfy the unstimulated demand for gaming. The consequence was the closure of many casinos and the licensing of a limited number. During the 1970s, some 125 clubs were operating, one-sixth in London but these 25 clubs generated 75% of the “total drop” (money exchanged for chips) until 1979/80 (Miers, 1983, p. 25). This figure remains largely unchanged:

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the 23 casinos currently in London accounted for 70% of the drop in 1999/2000 (The Guardian 9.5.01). In the 1970s the London night-time economy, concentrated in the West End, attracted high stakes players from overseas, particularly the Middle East, and was dominated by Ladbrokes and Coral, both owning four clubs and both public companies with bookmaking interests, together with Playboy Enterprises, a public company with interests in sex magazines, owning three clubs. Ladbrokes also owned 11 provincial casinos. The “club” casino was seen as a culturally and politically acceptable way to confine casino gambling to a small, affluent elite. The casinos, open only to club members, were limited almost exclusively to table gaming, with only 10 slot machines al1owed in each. They were also unable to advertize, “tout” for business or offer credit to punters. Miers, writing in 1983, commented that “casino development in Great Britain should not be compared with the deliberately expansionist polices which informed the legalization of casino gaming in Nevada in 1931” (1983, p. 35). By 2000 this was no longer true. Proposed changes in legislation (DCMS, 2001, 2002) now present gambling as a popular and “modern legitimate leisure activity” and envisage large hotel casinos as the catalysts to revitalize run-down seaside towns such as Margate and Southend in the south of England and Blackpool, in the north. The style of casinos projected by developers is the giant hotel-casino (six were initially forecast), with up to 2,500 machines in one setting, and the creation of up to 25,000 jobs. The casinos would bring together all forms of gambling, table games, betting and bingo under one roof. In a different type of development, Gala, a bingo and casino operator, planned a series of gaming sheds on greenfield sites close to major cities and towns (Ahmed & Mathiason, 2002). The U.K. government, following parliamentary concern, now favours more gradual development and tighter controls (DCMS, 2004). These include local influence on licensing, integration with local planning and upper limits on the number of machines. Nevertheless, the new legislation will still favour the large regional hotelcasino by placing limits on the development of smaller casinos. The rationale here, echoing U.S. developments, is that control of large established operators will be much easier than a proliferation of small casinos (DCMS, 2001, 2002; Sternleib & Hughes, 1983). However, state political interest will thus provide conditions for further consolidation of corporate and multinational interests. These casinos will therefore conform to the new global model of work organization outlined above. Their popular attraction will be gaming machines and jackpots as well as high-stakes table gambling. For example, the proposals include reference to casinos with no requirement for club membership and to electronic machines with unlimited winnings and no statutory limits on the stakes (DCMS, 2001, 2002). Other games, such as betting and bingo, will be licensed for

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play in casinos. The introduction of these new casinos, along with changes in other parts of the gambling industry, will end the British “non-stimulatory” approach, which used state policy to restrict both market expansion and public access. The creation of resort or hotel-casinos is not a specific government policy objective but is rather subject to private sector decisions and local authority approval (ibid.). Nevertheless, holiday centers will attempt to reinvent themselves as casino resorts – an example of glocalization through micro-marketing (Robertson, 1995). For those promoting these developments in the U.K. seaside town of Blackpool, this will constitute its third “re-invention” as a tourist center of spectacle/entertainment following the Blackpool Tower and the “Big One” Roller Coaster (BCP, 2000; Urry, 1990). The 300,000 Britons who currently visit Las Vegas every year, more than from any other country in Europe, will be able to spend at home, and work for dealers and hotel staff will also be created. In addition – and in contrast to the U.S. and Australasia – the U.K. government also proposes to legalize all on-line gambling services, whether via the internet, interactive TV or other media, on the grounds of important commercial opportunities for British operators and the impossibility of prohibiting these developments (DCMS, 2002, 2004).

CONCLUSION So, what is there to note about gambling as a new global entertainment sector? In one respect it is part of what Hobbs et a1. (2000, p. 702) refer to as “an increasingly complex mass of night time leisure options through which flow new economic and employment opportunities.” The shift towards an entrepreneurial stance on the part of both local governments and national states creates an “urban frontier” governed by commercial imperatives, resulting in the “marketing of liminal licence” (ibid.). Put another way, illegal “carousal zones” are being replaced by “diversion districts” (Judd, 1995). However, these transformations are not governed by purely commercial/economic considerations. This entertainment sector, at the forefront of changes taking place in cities, remains regulated by either national or local governments, which both license and franchise gambling operators, employees and machines. This means that the right to organize and sell gambling remains a privilege. It also means that local rather than purely global influences are critical. Gambling is, then, a specific case of the more general articulation of global/local forms. Regulation is required in all legal sectors and particularly in the finance industry where surveillance of financial transactions is crucial to industry credibility and profit (Austrin, 1991). In gambling, however, risks of malfeasance are especially high and must be contained as a condition of legality. In the rhetoric

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of modernizing gambling as popular leisure, governments seek to ensure that risks of addiction are addressed along with concerns about the impact of legalization on local economies (see, for example, recent U.K. proposals: DCMS, 2004). Of equal if not more significance are risks of abuse by punters and of financial irregularities by operators. It is these concerns which make surveillance critical and which make gambling particularly subject to local political contingencies and local regimes of regulation. In gambling local versions of the global form of the hotel-casino have shifted workers from the hidden to the formal economy, and governments from the role of policeman/inspector and operator of a stigmatized pursuit to facilitator/inspector of leisure opportunities. This new role for governments in gambling has arisen from different cross-cutting pressures. Firstly, governments have proved unable effectively to regulate an increasingly mobile form of legal and illegal gambling through centralized bureaucratic forms. Initial regulation through licensing and contracting arrangements retained both an extensive inspection role for governments and the segmentation of markets. More recent regulatory regimes are more locally diverse – ranging from monopoly franchises, private or state, to competition – but they have all adopted the Las Vegas style hotel-casino as an organizational solution and setting for legal gambling. It is in this new context that local narratives celebrating gambling as popular entertainment have become so important for new glocalized settings. The hotelcasino is constituted as a fixed city center or beach-front setting to which the state development strategy attempts to draw the mobile tourist. Concurrently gambling games have themselves become mobile and now circulate through different forms of distribution networks, including television, video and the internet. In turn, the deployment of these media is promoting the erosion of segregated markets and transforming the nature of work in gambling and the entertainment sector more generally. The establishment of the hotel-casino simultaneously as a new form of gaming based around (networked) table gaming and machines, as a form of control over routine work and as an entrepreneurial development project linked to tourism – all these are key to the “normalization” of both gambling and employment in what has become a central component of the entertainment industry. These interlinked developments provide for a “secure” public and private means of surveillance, and this facilitates acceptance by states and thus glocal outcomes.

NOTES 1. The paper draws on fieldwork undertaken in Australasia, North America and the U.K. between 1994 and 2003. Data sources include a diary of events and interactions in casino

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gaming based on observation and informal interviews in Australia (Melbourne, Sydney, Brisbane, the Gold Coast and Canberra), in the USA in Nevada (Las Vegas, Reno and Lake Tahoe), New Mexico, California (Los Angeles) and New Jersey (Atlantic City), and in the U.K. (Bristol). 50 semi-structured interviews were also conducted in New Zealand. 40 halfhour interviews took place in two casinos: in Auckland (employing 2,500 workers) and in Christchurch (550 workers). Employees here were interviewed with management consent just before, just after or during their shifts. A further 10 in-depth taped interviews of up to an hour and a half took place away from the scene of work. In all, formal interviews were undertaken with: 25 dealers, 6 supervisors, 6 pit bosses, 4 inspectors, 3 shift managers, 2 electronic gaming managers, 2 general managers and 2 chief executive officers. All those in supervisory positions and above had at some time in their career performed as dealers and had been recruited from Australia, the U.K., the U.S. and South Africa. The interviews thus verified differences in working practices evident from first hand observations in different jurisdictions and provided data on global networks. Discussions with British and New Zealand officials involved in the regulation of gaming who have extensive connections across jurisdictions and experience of the organization of casinos additionally verified differences in the construction of casino labor markets. 2. Further simulated forms are only a mater of time as the pace of innovation in this sector is extremely fast. 3. Tipping has also not been imported and outside of the U.S. is considered to be a matter of state policy. In Australasia and the U.K. the practice is viewed as directly encouraging the involvement of dealers in the financial arrangements of table games and is therefore prohibited.

ACKNOWLEDGMENTS We are grateful to Paul Edwards and Leni Beukema for comments on an earlier version of this paper which was presented at the World Congress of Sociology, Brisbane, July 2002. That paper examined both gambling and sex, but important parallels and differences between these two sectors of commercial entertainment require fuller treatment than is possible here. For discussion of prostitution labor markets and the significance of local variation in understanding work see West and Austrin (2002).

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Austrin, T. (1998). Retailing leisure: Local and global developments in gambling. In: H. C. Perkins & G. Cushman (Eds), Time Out: Leisure Recreation and Tourism in New Zealand and Australia (pp. 167–181). Auckland: Addison-Wesley, Longman. Austrin, T. (2002, April 2–4). Symbolic technologies, surveillance and simulation: Embodied skills and programmed memories in casino gambling. Paper presented at The 20th International Labour Process Conference, University of Strathclyde, Glasgow. Austrin, T., & Curtis, B. (1999). Simulation and surveillance: Developments in the production and consumption of real and virtual gaming. In: M. Collis, L. Munro & S. Russell (Eds), Sociology for a New Millennium: TASA Conference Proceedings (pp. 483–490). Melbourne: Monash University. Austrin, T., & West, J. (2003, April 14–16). From Las Vegas to Blackpool: Regulation, work and consumption in the hotel-casino. Paper presented at The 21st International Labour Process Conference, University of the West of England, Bristol. BCP (Blackpool Challenge Partnership) (2000). Blackpool rejuvenated: Proposals to bring prosperity to Blackpool through resort casinos. Blackpool: Blackpool Challenge Partnership. Berenson, A. (2003, 18 May). The states get bigger on betting. The New York Times. Castells, M. (1996). The rise of the network society (Vol. 1). Oxford: Blackwell. Crevelt, D., Crevelt, D., Gollenhon, J., & Crevelt, L. (1989). Slot machine mania. Grand Rapids, MI: Gollenhon Press. DCMS (Department for Culture, Media and Sport) (2001). Gambling review report (Budd Report). London: HMSO CM5206. DCMS (2002). A safe bet for success: Modernising Britain’s gambling laws. London: Department of Culture, Media and Sport. DCMS (2004). Draft Gambling Bill. Government response to the First Report on the Joint Committee. London: HMSO CM 6253. Eadington, W. R. (1995). Ethical and policy considerations in the spread of commercial gambling. In: J. McMillen (Ed.) Gambling Cultures: Studies in History and Interpretation (pp. 243–62). London: Routledge. Eadington, W. R. (1999). The economics of casino gambling. Journal of Economic Perspectives. Earley, P. (2001). Super casino: Inside the ‘new’ Las Vegas. New York: Bantam. Goodman, R. (1995). The luck business: The devastating consequences and broken promises of America’s gambling explosion. New York: Free Press. Hobbs, D., Lister, S., Hadfield, P., Winlow, S., & Halt, S. (2000). Receiving shadows: Governance and liminality in the night-time economy. British Journal of Sociology, 51(4), 701–717. Judd, D. (1995). Promoting tourism in U.S. cities. Tourism Management, 16(3), 175–187. Kingma, S. (1997). ‘Gaming is play, it should remain fun!’ The gaming complex, pleasure and addiction. In: P. Sulkenen et al. (Eds), Constructing the New Consumer Society (pp. 173–193). London: Macmillan. Knights, D., & Tinker, T. (1997). Financial services and social transformation. Houndmills: Macmillan. Lafferty, G., & McMillen, J. (1989). Laboring for leisure: Work and industrial relations in the tourism industry: Case studies of casinos. Labour and Industry, 2(2), 32–59. Lash, S., & Urry, J. (1994). Economies of signs and spaces. London: Sage. Macomber, D. (1984). Management policy and practices in casino operation. Annals, AAPS, 474, 80–90. McMillen, J. (Ed.) (1996). Gambling cultures: Studies in history and interpretation. London: Routledge. Miers (1983). Malpractices in British casino management. In: M. Clarke (Ed.), Corruption: Causes, Consequences and Control (pp. 24–38). London: Frances Pinter.

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GLOBAL LOGISTIC CHAINS AS A RESULT OF LOCAL PROCESSES: THE CASE OF ORCHIDS Leni Beukema and Harry Coenen ABSTRACT Work restructuring in the interference of the global and the local is discussed with distribution as starting point of analysis. The distribution sector in The Netherlands is introduced as a local part of a global context in which outsourcing becomes more and more general practice. Logistic chains, in which both production and distribution are incorporated are indicated as a promising level of analysis in gaining more insight in the dynamics of the process of work restructuring. The argument is illustrated by the analysis of the chain of orchid plants.

INTRODUCTION The process of globalization is accelerating because of the increasing use of Information and Communication technology (ICT), as is stated very often. Although we totally agree with this statement, a necessary supplement for understanding globalization more thoroughly is the analyses of the role of physical distribution in this process. Developments in physical distribution are both cause and result of the acceleration of globalization. It is a cause as technological

Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 159–173 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13009-4

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developments in means of transport, combined with low costs, give opportunity to connect different parts of the world very easily. It is a result because the very process of globalization itself increases the need for more transport of people and goods. Moreover, the results in a qualitative way are enormous: the interrelationship between production and distribution and the resulting complexity of processes in and with distribution are many-sided. It is not a coincidence that authors from The Netherlands pay attention to the distribution sector in a volume on work restructuring in terms of globalism and localism. The Netherlands have always had a strong position in the international market of transport and logistics. Spokesmen from Dutch business community and Dutch government like to see The Netherlands as “Gateway to Europe” and try to keep it that way in the future. The question is what are the implications of this picture in terms of economic activities, in terms of consequences for (the organization of) work and in terms of opportunities and costs for the local Dutch and for the global world society that go along with this. In this contribution we will discuss work restructuring in the interference of the global and the local by taking distribution as starting point of analysis. We start with introducing the distribution sector in The Netherlands as a local part of a global context in which outsourcing becomes more and more general practice. Consequences of this outsourcing can be seen not only in job growth in the sector, but also in the kind of working arrangements that have been made. We continue by indicating logistic chains (that incorporate both production and distribution companies) as a particular form of networks. We will argue that this way of analyzing networks is promising in gaining more insight on the dynamics in the processes of work restructuring and its global and local implications. This argument will be exemplified by the analysis of a particular chain (that of the orchids) as part of the logistic chain of flowers, a chain which plays an important role in Dutch economy.

FROM DISTRIBUTION TO INDUSTRIBUTION Distribution has four base components (Kerkhof, 1994; Striekwold, 1990). The first one is collection in which goods from their sources (for instance factories) are brought together. Here as many goods as possible are brought together to get advantages of scale. Second component is transport, where goods are taken from A to B. The third component is delivery at the customer. Here goods are sorted and small-scaled to increase market required flexibility. The fourth component is called consolidation and de-consolidation, where goods are repacked, loaded, stored, and where value added activities are taking place.

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Different dimensions play a part in this process, such as the substantive dimension of the type of transport (is special treatment required, such as cooling, liquid etc.?), the spatial dimension of destination, the time (frequency, speed) and the required flexibility (at the place of departure and arrival). Different combinations of these dimensions make different distribution services. Companies formulate their own core competencies and in that way bring about their own profile in the market. From old days, The Netherlands have a strong position in the market of transport and logistics: in bulk-transport and bilateral transport management their average market share in Europe is 70%, and in integrated logistics even 90%. Dutch logistic services are an international business: 60% of all Dutch distribution centers (DCs) deliver to more than five countries. About 550 of the approximately 950 European DCs are situated in The Netherlands (Tromp & Beukema, 2001). Growth in transport services is lower than in our neighbouring countries, though. The Netherlands are losing market share in bulk-transport and transportmanagement to Belgium, but both countries are threatened to be by-passed by carriers from countries with lower wages (Bain & Co., 1996). Moreover, in the liberalized European transport market, business no longer concerns just transport of goods. Several separate markets have come into existence (varying from heavy and mass transport to couriers- and packages-services), and specialization and expansion appear to be the only way to survive. Main cause for this segmentation and differentiation is the increasing tendency of production companies to concentrate on their central activities and to outsource activities not directly related to their core-business. The network enterprise (or enterprises clustered in networks) takes a particular form in longer logistic chains, that is to say: more different enterprises involved in the process of transformation of specific goods and services from source to delivery. Outsourcing takes place on local, regional and more and more on a global scale. Outsourcing stimulates the flexibility of companies by providing ancillary services that were formerly performed within the company itself. This implies a fundamental change in the logistic chain, where the traditional one-way flow of goods and services is replaced by all kinds of interactions between clients, distributors, logistic organizations and producers, who are sometimes sharing the leadership, sometimes engaging in real power-struggles for control over the logistic process. A European study by Price Waterhouse Coopers (PWC) reveals that outsourcing of transport and distribution already takes place in almost threequarters of all cases. Warehousing is being outsourced by more than half of the producers. According to PWC, this trend will continue, possibly implying that maintenance, information-control, production and supply chain management, as well as purchasing, finance and administration will also be outsourced and

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integrated in new concepts of ‘extended logistic management’ (Nieuwsblad Transport, 1999, No. 84, p. 2). Thus, one important paradoxical effect of these trends is that large distribution companies start rendering services around their core transport-business (“insourcing”): they not only transport and deliver, but also take part in, for example, consolidation and de-consolidation. These latter services are expanding in search of “Value Added Logistics (VAL)” in such a way that additional services involve assembly and/or labeling of the product (for either producer or client) in a distribution center (Nehem, 1993). As a consequence of this expansion of services, activities that used to be executed within the industrial sector are now being moved into the distributive domain, where wages are lower. The once unequivocal slogan Holland Distribution-land therefore no longer seems appropriate. Since the services rendered are at the intersection of industrial and distributive activities, the new sector is sometimes labeled industribution (Bouwman, 1994). Industribution means growth for the services sectors, sometimes at the expense of other sectors, but it also involves activities that used to be performed in the informal sphere of the household. Value Added Logistics is a booming business in the Netherlands, especially in retail and in business services (activities increasing by 18% respectively 15%). VAL activities involve mostly repetitive, simple operations, implying low-skilled labor and bad labor conditions, for which mostly temporary and female staff are hired (sometimes via temping agencies). VAL in small clientspecific numbers concerns highly-skilled labor, though, and requires skilled and experienced workers, for which mainly regular, male employees are contracted. Within the distribution sector, these developments lead to a sharp distinction between modern companies which concentrate on logistic services on the one hand, and companies which concentrate on the traditional distributive activity of transporting products from A to B on the other. For the latter, cost prices are most important in the struggle for competition. For the former, quality based on optimal control over the supply chain is just as important, or even more important than the price-level. Considering current European legislation, making Dutch legis1ation more flexible, or deregulation will only help to improve the competitive position to a certain degree. It is particularly the flexibility of services that appears to be a determining factor in the struggle with competitors. This involves flexibility with respect to different issues, like labor input, wage structure, working times, environmental requirements, and management. Information technology (IT) plays an important role here, of course. As far as the position with respect to (the quality and intensity of investments in) IT is concerned, the Dutch distribution companies belong to the European top, but Great Britain and Germany are moving closer. At the end of last century though, the largest Dutch package- and pallet transport firm that

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claims to have the most advanced computerized tracking & tracing-system in the world, was taken over as part of Nedlloyd by Deutsche Post (indicating that even the separation between transport and delivery of very small and large packages is diminishing). The importance of flexibilization can also be read from the pattern of job growth within the sector: in the last decade 4/5th of the net increase in jobs has come in part-time jobs and flexible jobs (which have doubled). The share of part-time and flexible employment in distribution and auxiliary transport activities covers more than a quarter of all jobs (of which 22.8% is part-time work, Eurostat, 1998, Table 3.5). Recently this has grown to one third of the entire amount of jobs (Fig. 1).

Fig. 1. Employment Growth in Transport, Logistics and Communication Differentiated in Full-Time, Part-Time and Flexible Jobs (×1,000). Note: Asterisks denote the flexible jobs of 1983 and 1987 are contained in the figures of the full-time and part-time jobs. Sources: CBS 1983 (SBI > 74, Table 4.1), 1987 (SBI > 74, Table 3.3), 1996 (Arbeidsrekeningen > 96–97, Table WN 1, 1997a (Arbeidsrekeningen, WN 33), 1997b, CBS 2003.

DISTRIBUTION AND (GLOBAL) LOGISTIC CHAINS Several authors have contributed important insights into the nature of the current process of globalization and the role networks play in this process. As we have seen above, for the distribution sector networks become increasingly important, if only for the tendency of outsourcing that accompanies it (Beukema & Van der Vlist, 1997). But also the power relations in networks, the changes in the relation of distribution towards production are at stake in the global network society. Without claiming to be exhaustive we will mention some themes we assess as very valuable as starting point of our analysis on the position of distribution in (global) logistic chains. Ruigrok and van Tulder (1995, p. 66ff) have contributed especially by paying attention in their typology of industrial complexes to the relations as they are built up between enterprises. They have formulated a continuum of positions of different players (among which distributors/dealers) towards the core firm in

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industrial complexes from “independent” to “dependent without influence.” By this they have conceptualized different relations of control and shed light to what we called earlier the “politics of logistics” (Beukema & Coenen, 1997, p. 12; Beukema & Coenen, 1999, in: Leisink, 1999). Castells (1996) is enlightening by his attention for, on the one hand, general tendencies like increasing importance of the production of knowledge and information, and on the other hand, his emphasis on the contextuality of the materialization of such developments. Lash and Urry (1994) make an important contribution to the translation of technological developments into the reflection on the organization of the primary process inside the enterprise. From our point of departure, logistic chains and the position of distribution in them, we wish to point out a number of issues that need supplementation. First of all, where the analysis of networks is concerned, we should like to link up the concrete content of the products in the network. Where networks exist between enterprises, several logistic chains can be involved, or firms can participate in several networks, each with their own chains. The relations between firms are thus not only determined by the nature of the network (for example Fordism, Toyotism or flexible specialization) and by their position in the network, but also by the product which they are working on. Thus, products of which the raw materials are physically determined will entail other options than products where this is the case to a lesser degree. The relations between the firms in the chain will also be different because of this. A first qualification of the relation between the nature of activities and the position of the firm can be found in Gereffi (1994), who distinguishes two coordinating mechanisms of logistic chains: producer-driven commodity chains and buyer-driven commodity chains. This distinction gives an important refining on the analysis of the authors mentioned above, because of its emphasis on the necessity to question the central starting point in the analysis of logistic chains itself instead of taking always the producer side as the natural core. But in our opinion a third party should be mentioned more explicitly between producers and consumers, that is the distribution (see also Fig. 2 in the next paragraph). This brings us to the second comment, concerning the relation between production and distribution companies in the network. Most sociologists of work have in common that distribution is always derived from production. This even counts for Lash and Urry who place transport of goods and information at the center of development towards globalization of the economy, but they, too, base their typology of reflexive accumulation mainly on production sectors. It is a question whether such approaches do not remain too much rooted in the past. With the development of chains in the era of information technology, it is very possible that the relations between production and distribution enterprises themselves are shifting. In this connection research into “chain management” as suggested by Klapwijk (1996, p. 60ff.) is of importance. Klapwijk analysis different dimensions

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Fig. 2. The Chain of Orchids and its Participants. Source: van Oosterhout (2004).

in value adding activities of products and services and states that depending on the dominance of these dimensions different players on the logistic chain play the role of chain manager. Traditionally, in the first phase of the product life cycle the producer is the most important player. When the market is nearly saturated, prices are low and many providers are active (suppliers and/or distributors), power shifts to the retailers/distributors. Increasingly, distribution companies become more powerful because of their more direct contact with end-users. This requires a reflexive approach from these companies in the sense Lash and Urry indicated. A final point we wish to make in comment on the authors under discussion, is that when risks produced by technology are taken into account in the analysis of global logistic chains, the image tends to change (Beck, 1992). This is true when the control of logistic chains is involved or when the ecological effects of growing global transport come under consideration. In the next paragraph we will go further into the themes mentioned above in our analysis of a particular logistic chain, that of orchids, an exotic plant that is cultivated in the polders of The Netherlands for quite some time.

ORCHIDS, EXOTIC IN THE DUTCH LANDSCAPE1 To analyse the chain of the orchids (we restrict this case study to the plants of the orchids and leave the cut flowers out) we’ll first give an oversight of the

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participants in the chain. After this description we analyse the interactions between participants in the chain. This analysis makes it possible to get more insight on the interrelationship of the global and the local in this particular chain. When following the orchid through the chain we see the following: First comes the augmentation where new varieties are propagated and existing varieties are cultured (mostly through cloning) in laboratories. Then plants are raised in nurseries until they can come to flower. When the buds are just coming into flower the next stage has arrived: the plants have to stay cool until they are ready for sale. Sometimes they stay in another greenhouse of the same nursery, sometimes they are transported to another nursery. The production process takes quite some time: four to five years. Nearly all nurseries are associated with the auction-mart and by rule obligated to sell their products through the auction or – when they have direct contact with exporters or wholesalers pay a part of the price they make to the auction. Transport from nursery to auction-mart is done by nurseries themselves or by specialized transport companies. The auction-mart is also the place where consolidation of goods is taking place: they are repacked and loaded in such a way that the phase after sales – transport to wholesalers and export firms – can take place as fast as possible. Storing takes only a very short time: a couple of hours during the night between arrival at the auction and sales. Two auction-marts dominate the Dutch market: Flora Holland and Bloemenveiling Aalsmeer, of which the last one by far is the biggest for flowers and plants together (in 2002 sales of 1,584 million Euro for Aalsmeer and 462 million Euro for Flora Holland). The auction-mart has several ways of making transactions: publicly through the clock, where the market price is made or through the exchange agency where buyers and sellers are connected directly. Transactions through the clock used to be the main activities at the auction. Since several years this is diminishing in favour of transactions through the exchange agency (in one of the main auction-marts its share increased from 46.4% in 1998 to 55.6% in 2002, Bloemenveiling Aalsmeer, 2003). Nurseries and wholesalers/exporters appreciate the advice of these agencies and gain a better balance between price and quality because they get more insight on the question of timing their sales transactions. Auction-marts play an important role in organizing the chain. They not only set the rules for the other players, but also expand their distribution activities (f.i. transport within the auction itself is “insourced” in Aalsmeer by a “shuttle”). The two big auction-marts together have sales of more than 2,000 million Euro a year. The chain of orchid plants is a relatively small part of the total sales of the auctions (around 2%). Export firms and domestic wholesalers are the next players on the chain: they buy products from the auction, de-consolidate the goods and are responsible for the

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organization of transport to buyers. In some cases they do the transport themselves (mostly for the domestic market and countries as Belgium or Germany), in other cases they outsource transport to specialized firms (either by road or by air). Most export firms and wholesalers are situated on the premises of the auction. This spatial situation increases possibilities of speed and logistic standardization, one of the main characteristics of Dutch competitiveness on the chain of ornamental plants. Not only exporters and wholesalers buy directly from the auction, also retailers from the region do so. When they buy from the clock they pass the wholesalers and can enlarge their profit considerably. Every transaction after the market price is made at the auction increases the price of the plant around 100%.

Interactions Between Chain Participants Participants at the production side of the chain are mostly small family-based firms, where only in the bigger firms some workers are hired. The auctions on the other hand are larger with 1,000–2,000 employees and professional management. Wholesalers and exporters are small to middle sized firms, mostly specialized in ornamental plants, of which the orchids are part. These characteristics explain the relatively strong coherence in the chain between different participants: the product is a common reference point, the knowledge to work with the product is gained at the same school, there are many personal contacts etc. We analysed interactions between chain participants according to Giddens (1984 a.f.; Coenen, 1989, 1996) in terms of schemes of interpretation, use of power and use of normative rules by participants in the chain. Together they form the structuring of the system of logistic chain of orchid plants. For the structuring of the system the following themes turned out to be essential. In the first place the use of knowledge: nurserymen have from way back devoted themselves to the nursery process. Producers hold power over the technical specification of the product and that knowledge was up till some years ago enough to decide what was to be produced. Nursing orchids is a specialized production process and the quality and beauty of the product together with working efficient and effectively took their full attention. Selling was left to the auction-mart and it is this point of the chain where knowledge of the product is integrated with knowledge of the logistic process and of the market. It is not surprising then that, when demands of consumers take a more prominent position in the selling process, the exchange agency of the auction is becoming more and more important. People who work there are key figures in the chain: they work on basis of personal contacts with the other participants in the chain. Moreover they work extremely efficient by buying

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and selling by heart “because we don’t have time for the computer.” IT is only used afterwards when they have to read their work into the computer because of the financial transactions that have to take place. Exporters and wholesalers know the demands of the market best. Especially the larger firms do not rely only on the auction, but keep in close contact with consumers and producers themselves: Our customers get uniform quality, they count on that and we take care of that. That means we maintain close relations with producers. They deliver products we need. Sometimes we think together and if necessary we invest with them. That way you get a system where you can rely on each other and everybody can earn their money (Aalsmeer, 2003, p. 21).

A second theme concerns the price – quality balance. Traditional nurserymen take much pride in the quality of their products, a product for which the customer was always willing to pay a good price. This was especially the case because demand was bigger than supply. When the market grew, nurserymen who took price as the most important standard founded new and bigger nurseries. Without having the specialized knowledge of traditional nurserymen they produced orchids of less quality. These traditional nurserymen saw their market spoiled, because price differentiation is unheard of within the chain: the price of the clock at the auction is taken as starting point for the price setting of all orchids, also of those who are sold via the exchange agency. Although the auction has quality demands and the quality is given at the clock, this doesn’t comply fully. At the moment of the research the supply grew and participants expected decrease of prices in the future. For the traditional nurserymen this means a choice between a reduction of sales or less quality. For the relations between chain participants it means shifting of rule capacity to the distributors. A third theme is the difference in time horizon of different participants on the chain. Producing time is long, four or five years. This means it takes some time to meet the demands of customers, a matter of continuous discussion between producers and the other participants in the chain. When products finally arrive at the auction time speeds up immensely. The logistic systems at the auction-mart is extremely well organized: it takes no more than 48 hours between lifting the plant out of the box at the nursery and delivery at the retailer in any place of the world. One of the consequences of this speeding up of the turnover rate is the abolishment of the distribution phase of storing (just-in-time distribution par excellence). This speed is organized by strict rules of the auction towards the other participants in the chain: goods can only be delivered at a given time, the packaging is given, the use of shuttles is given etc. The above themes make it clear why chain management is in hands of the auction-mart. When producers founded the auction at the beginning of the 19th

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century, the sale was organized in a small shed. In time the auction has grown to an enterprise with sales of millions of Euro, known all over the world. Because of this enormous growth individual producers have lost their power over the auction. The chain of orchids is dominated by a specific part of the distribution process, the auction, which sets the rules that producers and buyers have to meet.

Dutch(?) Orchids in a Globalizing World What then, is the form of interference of the global and local in this particular chain, when we return to the central question of this article? The first form is a historical one and concerns the symbolic dimension of the product. Orchids are not a natural product in The Netherlands, they come from exotic parts of the world and are imported in our country since the 18th century. They were a symbol of status for the rich and stayed that for a long time. Orchids became only in the last decades more widespread; among the flowers and plants it still is widely considered as the most delicate of all. Some ten years ago one of the Dutch most influential interior decorators gave orchids a prominent place and since then the demand has grown very fast. Orchids symbolize in our country nowadays not only the exotic but also good taste and modernism. One could say that the global dimension of it is internalized in the local: the original tropical product has firstly been de-localized and subsequently re-localized in the glasshouses and on the windowsills in the Dutch polder. Although the orchids still makes a tropical, exotic impression, for Dutch people it has become a completely normal product. At the same time nurserymen begin to consider the world as their garden. Especially Africa becomes a second place of production for them and we see the beginning of a new flow of migration. Reasons for this flow are lack of space in The Netherlands to build new firms and the economical advantages of countries in Africa. The circumstances for production are very different (more space, less heating, cheaper labor costs) and nurserymen bring Dutch customs with them. They work together to learn from each other the adaptations that have to be made. This movement regard ornamental plant cultivation as a whole, figures on the part of orchids are not available up till now. What is striking is the role of the auctionmart in The Netherlands: goods are still sold through this auction. That means an increase of the last part of the costs for the nursery: transport. If prices are no good, production isn’t sent. We bring nearly everything to the clock in Holland. We have a very good relation with the auction and have made agreements with them before starting in Africa. That was comforting. Structure of sales and relations in The Netherlands form an important part of your basis. I don’t think one can produce successfully abroad if you don’t have this basis at home.

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Here we see the importance of transport (both physical and of information) in the process of globalization. Precondition of this migration of plant cultivation is firstly simultaneity of crucial information in different parts of the world. It is necessary to have immediate access in an African country to information from The Netherlands on prices at the auction. Instantaneous time is becoming more and more a factor of competition. With the possibilities of IT this instantaneous communication is open to everybody with some money in the pocket, regardless of the part of the world form which he or she operates. A second precondition for the process described here are the possibilities of fast physical transport at low costs. The expansion of airfreight is here clearly both precondition and result of the process of globalization. In a couple of hours products can be transported from Africa to The Netherlands and because of this possibility nurserymen can make the choice of settling outside their home country. Because of these choices airfreight is increasing, etc. Here not only the possibility of airfreight is at stake but also the relatively low costs of it, due to the prices of fuel. Due to this process, the selling of products that are grown abroad (whether in Africa or somewhere else) is becoming more common for the auctions. Flora Holland (the second largest auction concern in The Netherlands) sold in 2002 under the clock nearly a quarter of their products from abroad (5,000 million products from The Netherlands and 1,600 million products that were produced abroad; Flora Holland, 2002, p. 8). Flowers are up till now more prominent in this process, because of their weight and the costs of air transport. It is not unlikely that also the packaging of plants will become lighter and more and more plant ornaments will be flown into The Netherlands to be sold there to other parts of the world. This process is under discussion by several groups of environmentalists and NGG’s, who indicate the environmental costs of air fright and the coming of polluted production in African countries. The third point where interference of the global and local is increasing is the export. Ornamental plants are long since one of the main export products of The Netherlands and this export is still growing. Most of the export is taking place in the European region, but also Russia and the U.S. are growing markets. Increasing export also means increasing differentiation in cultivated variety: every country has its own customer demands concerning colour, length of stems etc. The influence of demand on production is increasing in this segment of the market also. The importance of the auction in the logistic chain is deeply influenced by its place as gateway to the international market. This is not only due to the fast logistics and the quality demands of the auction towards the producers, but also – because the exporters are situated in the auction-mart itself – activities can be centralized with reduced costs, increased quality and the possibility of personal relations as

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result. Here we see also the significance of local interactions in global influence. This policy has even made the Dutch auction price setting in the world market of ornamental plants: because of its precise organization of the logistic chain and the speed that goes with it, its potential of competitiveness is very great in all parts of the world.

CONCLUSIONS What then, can be said in conclusion on the role of physical distribution in work restructuring in the interference of the global and the local? In this contribution we have argued that more attention of sociologists of work for the distribution sector in studying processes of work restructuring can be very fruitful. When distribution is not taken into account important forces of development and of changing power relations could be overlooked. This attention for distribution goes along with the study of logistic chains as a supplement to network analysis. The study of the chain of orchids show indeed the opportunities of this kind of approach. Firstly the study shows how production and distribution become more and more interwoven in this sector because of the changes in the symbolic meaning of the plant (from symbol of status for few to modern lifestyle for many). This change is combined with different adaptations of the plant according to specific demands of different global and regional markets: relocation is a process that doesn’t pass this product. Knowledge of these different markets (and the changes that take place in each one of them) is available in the distribution part of the chain: exporters and wholesalers are experts on this matter. This knowledge is of value for producers in the chain: they need to know how to invest and adapt their products. The sphere of different cultural demands from different locations of the world thus enters the economic sphere of producers on Dutch location. Secondly the case shows the importance of logistic organization to become an important player on the global market. Speed is a central competitive matter on this global market, which is extremely important for perishables as ornamental plants, but which counts more and more for most products and services. Just-in-Time production and distribution, the shortening of product-life cycles, the reduction of stock in order to increase profit are all tendencies that ask for as much speed as possible. If one of the players on a chain is able to organize that speed it is an advantage in the global competition for all players involved on the same chain. This means that logistics are an important resource to gain power over other firms (whether producers or distributors) and a competitive advantage on a global scale. In the case of the orchids the auction has succeeded in this organization of logistics, by which a local actor gains a place to be known on the global market.

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Finally, the approach of logistic chains shed another light on the question of chain management. Earlier we have mentioned the distinction of Gereffi between producer-driven and buyer-driven commodity chains as an important contribution to refining the analysis of networks and network enterprises. Here we want to go one step further in this refinement and take firms that have distribution (or a part of it) as its core business also as possible chain managers (as is the case in the Dutch orchids). The power matrix Klapwijk has introduced (1996, p. 91) may help us take this step. He in fact analyses distribution in its four components and indicates that also wholesalers are potential chain managers (namely when there are more suppliers and low customer retention and regional market share). In our case the auction-mart fulfils this role of the wholesaler. This auction-mart is of course a very special case since it has started as a co-op of producers (and de jure still is) but has in fact developed towards commissionar of the same producers. But despite this particularity the case shows convincingly the necessity to keep questioning the role of chain manager and its relation to the players on the chain involved.

NOTE 1. In this case study we have cooperated with Gert-Jan van Oosterhout who has gathered the data. We thank him for letting us use them for this article and for the inspiring discussions we had about them.

REFERENCES Bain & Company Business Consultancy (1996). Ten dienste van Nederland. Een onderzoek naar de positie van Nederland in de internationale commerciele dienstensector. Den Haag: Ministerie van Econonllsche Zaken. Beck, U. (1992). Risk society. London: Sage. Beukema, L., & Coenen, H. (1997). Just-in-time-distribution. Over de opkomst van logistieke dienstverlening in de fysieke distrihutie en de consequenties dam.van voor de arbeidssituatie van werknemers. Utrecht: A WSB. Beukema, L., & Coenen, H. (1999). Global logistic chains; The increasing importance of local labour relations. In: P. Leisink (Ed.), Globalization and Labour Relations (pp. 138–158). Cheltenham: Edward Elgar. Beukema, L., & Van der Vlist, A. (1997). Wachturen als lugistiek probleem. Utrecht: Utrecht University. Bouwman, T. (1994). Snel weg. Goederenvervoer, arbeid en milieu. Amsterdam: FNV. Castells, M. (1996). The rise of the network society. Oxford: Blackwell. Coenen, H. (1989). Handelingsonderzoek als exemplarisch leren. Utrecht: Van Arkel. Coenen, H. (1996). The model of exemplarian action research. In: B. Boog, H. Coenen & L. Keune (Eds), Theory and Practice of Action Research (pp. 13–21). Tilburg: University Press.

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Flora Holland, Jaarcijfers 2002 (pdf-bestand). Gereffi, G. (1994). Capitalism, development and global commodity chains. In: L. Sklair (Ed.), Capitalism and Development (pp. 211–232). London: Routledge. Kerkhof, M. (1994). Innovatie in de dienstverlenende sector. Enschede: University Press. Klapwijk, P. (1996). Global economic networks. How deregulation leads to a new economic landscape. Amsterdam: Klapwijk Holding. Lash, S., & Urry, J. (1994). Economies of signs and space. London/Thousand Oaks/New Delhi: Sage. Leisink, P. (Ed.) (1999). Globalization and labour relations. Cheltenham: Edward Elgar. Nehem (1993). Meer doen met lading. Amsterdam. Nieuwsblad Transport (1999). No. 84. Groningen: Kluwer. van Oosterhout, G. J. (2004). Globalisering en Ketensamenwerking. Een casestudy naar de keten van potorchideeen. Utrecht: Utrecht University. Ruigrok, W., & van Tulder, R. (1995). The logic of international restructuring. London/New York: Routledge. Striekwold, M. E. A. (red.) (1990). Logistiek Begrippenhjst. Deventer: Kluwer Bedrijfswetenschappen. Tromp, C., & Beukema, L. (2001). The Dutch “Poldermodel”; A flexible success-story. In: J. E. Dolvik (Ed.), At Your Service? (pp. 145–189), Brussels: P.LE.-Peter Lang.

TAKING A SEAT IN THE GLOBAL MARKETPLACE: OPPORTUNITIES FOR “HIGH ROAD” UPGRADING IN THE INDONESIAN WOOD FURNITURE SECTOR? Anne Caroline Posthuma* INTRODUCTION Conventional wisdom regarding the gains from globalization states that, if managed correctly, it can lead to increased market opportunities for firms to grow and prosper, including small and medium enterprises (SMEs). Nevertheless, some sectoral case studies raise questions regarding the terms under which SMEs in developing countries participate in global production systems and the scope of opportunities that globalized markets actually do offer for industrial development and SME upgrading in developing countries. A first glance at the Indonesian wood furniture industry suggests that this local craft-based sector may provide an exemplary case of how globalization has fostered favourable conditions for a developing country industry to internationalize, grow and diversify. Indeed, recent work-in-progress shows how local furniture production was revived in the 1970s, rapidly penetrated global markets in less ∗ The author is a Senior Specialist in the Job Creation and Enterprise Development Department (EMP/ENT) of the International Labour Office (ILO). The opinions expressed in this text are the author’s and do not necessarily reflect those of the ILO or its constituents.

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than 30 years and has led to an intense process of local industrial expansion and dense inter-relationships of production, sales and out-sourcing of skilled carving work in dense SME clusters.1 However, a deeper examination reveals that the terms of insertion in this global industry mean that globalization now threatens to deprive these Indonesian furniture producers of the international markets they have accessed, as new producers in the region now attract global buyers with lower production costs and craft skills. Perhaps of greater concern is the realization that this burgeoning industrial growth fed upon a seemingly endless supply of Indonesian teak and mahogany that is now rapidly being depleted. Both endogenous and exogenous factors in the furniture clusters examined are responsible for limiting the sustainability of their current basis of competitiveness. This case study raises important developmental questions regarding the space that exists in the global economy, especially in quasi-hierarchical governed value chains, for SMEs in developing countries to find new and favourable market opportunities that will allow them to grow and thrive, while also providing good quality working conditions for workers. The core question posed is whether Indonesian SMEs can restructure and identify strategies that will enable them to reach a virtuous cycle between expanded production, new export markets, developing more skill-intensive operations and improving the quality of employment and working conditions for workers. The role played by SMEs as an important source of job creation in developing countries and contributor to national GNP has formed a key element on the policy-making agenda of many countries over the past 20 years.2 Despite this potential role, one must nevertheless recognize the difficulties associated with SME development and sustainability. While SMEs arise relatively quickly and frequently across all sectors, the mortality rate is high during the first five years of existence, as many firms cannot withstand competition and fail to grow. Second, SMEs are often associated with low levels of investment, weak technology transfer and mastery, low productivity and inefficient work practices. Third, SMEs are frequently associated with poor working environment and, at times, the use of informal employment practices. Fourth, some SMEs have demonstrated a low degree of compliance with regulations and fiscal policies, that may create a further set of constraints for access to markets, credit and services. Hence, there is a clear need for government policies that boost SMEs in ways that capture their potential for dynamic job creation and responsiveness to changing market conditions. Yet, despite an awareness of the importance of SMEs, core industrial policies still tend to be directed toward supporting larger companies (Reinecke, 2002). Where policies are specifically directed toward boosting SMEs, this is often within the framework of more conventional policies such as providing subsidies and micro-credit (Tendler, 2002).

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One core problem for many SMEs is their isolation. Bolstering the embedding of SMEs in productive relationships can generate a number of benefits, such as enhancing external economies, reducing transaction costs, boosting bargaining power vis-`a-vis buyers and enabling collective efficiencies. The potential benefits to be gained through more intense horizontal and vertical linkages between firms have long been identified, described in the early 20th century by Alfred Marshall and more recently in the extensive literature on clusters and industrial districts. The recognition of these benefits to be derived from dynamic SME networks led to a great deal of attention directed toward the issue of inter-firm linkages and the apparently superior competitiveness of firms in regional industrial districts, such as in the Third Italy (Sengenberger & Pyke, 1992). This interest was further driven by evidence that these districts and clusters of firms demonstrated greater resilience during times of economic downturn than their larger counterparts (Nadvi & Schmitz, 1994). As the process of market liberalization and the opening of economies around the world began, attention was directed toward the role of global production systems, and in particular, the implications that global commodity chains raised for helping SMEs in developing countries to upgrade, acquire new technologies, learn new techniques and quality control methods, as well as access new and more demanding export markets (Gereffi, 1999; Gereffi & Korzeniewicz, 1994). International comparative studies helped to identify different types of vertical relationships between developing country suppliers and global buyers. In particular, the differentiation between producer-driven and buyer-driven commodity chains revealed the different scope for SMEs to wield some bargaining power and upgrade through entering these vertical chains (ibid.). Other studies have examined the relationship between clusters of SMEs in developing countries with buyers through global value chains. These studies have examined the opportunities and risks for participating in the global economy in a variety of sectors and have considered some ways of how to be protected from the negative impacts (http://www.ids.ac.uk/ids/global/colepub.html, World Development September 1999 and Gereffi & Kaplinsky, 2001). Of particular interest are the more general findings that have emerged related to identifying four different forms of governance of value chains by global buyers and the implications raised regarding the scope for supplier upgrading in each (Humphrey, 2003; Humphrey & Schmitz, 2001). While much of the literature supports the benefits of building both horizontal and vertical inter-firm relationships, it is also clear that not all linkages are equal. An emerging policy question is whether interventions can be defined to help forge “virtuous linkages” – i.e. interfirm relationships that both foster increased competitiveness and access to new market opportunities, while also supporting the

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improvement of working conditions and terms of employment for workers. Hence, there is a need to identify how to strengthen the “embedding capacity” of SMEs in ways that will generate positive impacts on employment generation and working conditions. It remains a core question whether a path of “high road” upgrading can be found, demonstrating that competitiveness in the global economy and good labor conditions are not mutually exclusive goals. The following case study aims to highlight possibilities for upgrading in global markets, in ways that can also contribute to raising the skill-intensity of the work involved, and conditions of work and employment for the labor force.

ORIGINS OF JEPARA’S WOODWORKING PROWESS The town of Jepara is inextricably linked with an image of craft tradition in the Indonesian imagination. The origins of Jepara wood carving are shrouded in legend, where local tales celebrate the town’s past glories and tell of how past kings magically granted citizens their great wood-working skills. Historical records confirm that a wood-carving industry has long-existed in the Jepara region, and that the skills, aptitudes, values and tools necessary for a craft industry have survived the passage of time and of political and economic upheaval. By the 16th century, Jepara was already a thriving commercial center. Yet, the town slipped from its former glory in the 17th century, after the Dutch burnt the town and moved the administrative center to Semarang. After a long dormant period, the local industry was resuscitated in the 1970s through a revival of domestic demand and renewed appreciation for traditional-style furniture. With this growth, Jepara has re-emerged as the hub of a burgeoning industry, encompassing approx. 3,000 firms, including 100 large and medium enterprises scattered across 80 villages (Sandee, et al., n.d., p. 15). Employment was estimated at 44,000 workers by the late 1990s, but this total employment could easily double, if one considers those employed on a piece-work basis (Schiller & Martin-Schiller, 1997, p. 21). Following a modest initial attempt at exporting in 1986, the value of exports had reportedly reached US$169 million in 1998 (ibid).3 The 32 furniture clusters in Central Java were responsible for 21.6% of the Province’s total exports in 2001 (down from 27% in 2000), as compared with 13.2% for garments and 13% for textiles. At the national level, the furniture industry represents 1.87% of total manufacturing outputs and adds around 2.7% to the total value of Indonesian exports (CEMSED, 2003, pp. 3, 4). The wood furniture sector in Indonesia offers a very compelling case of the opportunities and challenges raised by globalization for SME producers in

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developing countries. It will be seen that a large part of Jepara’s export success is due to a convergence of favourable circumstances, both externally and internally to the wood furniture cluster (and others in Central Java Province). However, the sustainability of this success is under question, as competitive pressures are rising in this industry, due to cost-cutting competition from other countries in the region, especially China and Vietnam. Jepara’s export success has been either boosted or challenged by the interplay between a set of exogenous and endogenous factors. Two main exogenous factors that play in this scenario can be highlighted. First of all, the rise in global demand for hand-crafted furniture encouraged the rise of Jepara furniture exports. However, subsequent changes in the sourcing practices of the major global buyers in the wood furniture sector, particularly the search for cheaper products in lower labor-cost countries in the region, is a key determinant of whether market opportunities are opening or closing, and where. For example, the share of exports of secondary processed wood products from developing countries to the OECD from Indonesia dropped from 17% in 1996 to 15.4% in 2000, whereas China increased its share from 22% in 1996 to 35.7% in 2000 (Tissari, 2002, p. 10). It is unreasonable to expect that any country could compete against China on wage costs. However, when one compares labor productivity in 2000 between Indonesia ($28,000 per employee, per year) and Italy ($89,000 per employee, per year) (Tissari, 2002, p. 23), this suggests that Indonesian production falls between two stools – it is neither competitive as a low labor-cost zone, nor as a high laborproductivity zone. Second, the creation of an enabling macro environment via policy interventions by the Indonesian government have been important. In 1986, the Indonesian central government adopted pro-market reforms directed toward this industry, including deregulated exports. It also invested in upgrading regional harbours, such as Semarang, which greatly reduced the transport distance from Jepara to export finished furniture and some local roads were improved. Export procedures were further eased, so that by 1996 approval was only required from the shipping agent and surveyor who conducted the final inspection prior to checking and sealing the shipment (Schiller & Martin-Schiller, 1997, p. 9). The depreciation of the Rupiah to the dollar due to the Asian financial crisis of the late 1990s provided a temporary boost to exporters, especially due to the fact that they had a low import coefficient, as most raw materials were available locally. By the same token, this depreciation increased local costs, and brought a decline in domestic sales of wood furniture. The government sponsored several regional, national and international furniture exhibitions that boosted international awareness of Jepara furniture and brought many new foreign entrepreneurs to the country. Finally, the Jepara government placed a tax on the shipment of unfinished timber from Jepara,

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and the central government banned the export of logs in 1987, thereby creating an effective protection of the domestic timber industry for domestic producers.4 The lifting of this export ban on timber in the late 1990s has only contributed to the illegal logging and devastation of national forests, as well as higher costs and difficulty to access timber by local producers. Several main endogenous factors can be considered as boosting or hindering the competitiveness of this industry. First of all, the rapid growth of export sales meant that some producers in Jepara were not able to meet their production targets and agreed delivery schedules – as a result, companies have lost some of their business credibility. Second, Jepara has grown and become crowded,5 and as a result has served as the springboard for the creation of other clusters, as some businesses move to form newer clusters with new opportunities. Similary, the rivalry that has arisen between local producers and some foreign exporters, has led to an outmigration of many foreign-owned firms. Foreigners have played an important role in the development of this local industry. On the one hand, they have tended to enter, and dominate, the higher valueadded activities associated with sales and exports, which has led to resentment among the local population and Indonesian producers and traders. On the other hand, foreign traders have provided access to important markets overseas, have helped upgrade the quality of local furniture production and have facilitated access to working capital by extending partial advance payment for export transactions, which may help the producer to cover a large share of initial costs of timber and wages. Foreigners have also contributed crucially to introducing new designs, helping to diversify the range of designs available, as local firms have imitated and tried to differentiate themselves on the basis of timber quality, finishing techniques and design. As a result, Jepara has developed a reputation of being highly flexible in production of “antique” reproduction furniture. Some Jepara producers disregard copyrights and exclusive designs are put on the internet very quickly and consequently become available to other producers and buyers (Sandee et al., n.d.). Finally, the growth of the local industry has brought about a much denser network of clustering activities among furniture producers. As few large firms have emerged, taking a role as the manager of their supply chain, others have engaged more actively in out-sourcing specialized parts of the production process to smaller firms. A recent survey of the clusters in Central Java Province reveals the high density of relations between firms within the same cluster, as well as the intense buying relations across clusters in this Province (CEMSED, 2002).6 This process has also involved more flexible production and labor practices (ibid.). A general conclusion of this analysis is that Jepara is in a process of transition, moving toward the greater participation of Indonesian businesses in both production and marketing. This is a painstaking process, involving success

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but also mistakes, as enterprises are engaged in a costly learning process of how to participate in the international furniture trade. In this process, some labor is shed, and increased cost competition raises negative consequences for labor standards and working conditions (Sandee et al., 2002). The next section of this paper will adopt a value chain analysis in order to better illustrate the complex range of challenges that exist for local industries in developing countries that participate in global markets. In particular, the paper will target three aspects of the production chain in the wood furniture industry. First of all, we start with the downstream pressure from global markets in search of evercheaper mass-produced goods, and consider whether niche markets may provide an important strategy for diversifying production. Second, we focus on existing labor practices in these firms and question whether increased competitive pressures will lead to higher degree of unregistered firms (already at 83%) and use of informal labor (at 67%) or whether a “high road” option of improved competitiveness, with good business and labor practices, might be a viable option. Finally, we explore whether the upstream constraints surrounding the restricted supply and rising cost of teak and mahogany to this industry will create a bottleneck to the sustainability of this industry, given the existing policy interventions to sustainably manage the limited remaining forest resources in the country.

MAIN FINDINGS AND CHALLENGES The following section draws upon preliminary background research which has been conducted for this project thus far. The discussion will first address some issues related to downstream linkages in the value chain (i.e. with global buyers) and then upstream linkages related to problematic access to raw material inputs and national forestry management. We then turn attention to the informality of individual firms in the Central Java clusters and of their hiring practices. The final section will highlight some policy implications that appear to be relevant at this stage of the project research. The Indonesian wood furniture industry is a particularly interesting case to examine in terms of SME upgrading possibilities in a globalizing world. First of all, it is an industry that has experienced a substantial rate of increase in global trade since the 1990s (Kaplinsky et al., 2002). Second, it is a buyerdriven chain, which enables us to examine the role of global buyers in creating and limiting opportunities for increased access to export markets and functional upgrading by local SMEs. Third, wood furniture is a resource-intensive industry, which raises important implications about upstream bottlenecks and environmental sustainability of such industries if the local resource base is not managed carefully.

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Finally, wood furniture is an important industry for Indonesia and a core industry in Central Java Province, accounting for substantial job creation, income generation, production and export earnings. Furniture production contributes between 1 and 1.87% to total Indonesian manufacturing outputs, and around 2.7% to the total value of Indonesian exports, which is higher than the share of most other sectors. In Central Java Province, wood furniture is the largest contributor to provincial exports, accounting for 27.16% of total exports in 2000 and although this dropped to 21.57% in 2001, this was still the highest share of total exports (versus garments with 13.28% and textiles with 12.80%) (CEMSED, 2002, pp. 3–4).

Downstream Linkages in the Wood Furniture Value Chain Trade data from UNCTAD on exports of wood products from selected Asian countries reveals that substantial growth was attained during the 1990–1995 period, but that growth rates of exports declined substantially in the same set of countries during the 1995–1999 period (Readman, 2002, p. 9). It is worth noting that the

Fig. 1. Wood Furniture Value Chain. Source: Readman (2002), adapted from Kaplinsky et al. (2002).

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growth rate slowed even in China. Hence, this slow-down in exports is not a problem confined to wood furniture producers in Central Java Province, but more generalized to other furniture producing countries in the region. Impacts from the Asian financial crisis may not be a relevant explanation in this case, as exported products were generally found to have benefited from exchange rate devaluation resulting from the crisis. Instead, one might hypothesize that this slow-down reflects more structural factors in the wood products industry, possible involving world market factors, changes in buyer preferences, changes in sourcing decisions, or saturation of markets (Readman, 2002). It is useful to bear in mind the extensive structure of the wood furniture value chain. A simplified representation of the value chain in the wood furniture sector is given in Fig. 1. Some clusters examined in Central Java Province include exporters. This trend to include marketing and export agents in the clusters has been encouraged by two local factors. First, since 1990, many foreign businessmen started operating in the furniture cluster in Jepara and some established a partnership with local entrepreneurs based upon a division of labor where the local partner would deal with production activities and the foreign partner would deal with marketing. Second, since 1997, the Indonesian government has opened the furniture subsector for foreign investment (CEMSED, 2002, pp. 8–9). However, this arrangement has not been entirely satisfactory in some cases and has contributed to a nationalist sentiment toward business practices (Ibid). This sentiment is understandable when one gets an idea of the share of value-added obtained by wholesale and retail trade, as seen in Fig. 2. The large share of revenues to be gained by traders also suggests

Fig. 2. Distribution of Value Added in the Wood Furniture Value Chain – the Perspective of Global Buyers. Source: Readman (2002, p. 24) data based upon company interviews.

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Table 1. Different Linkages Between Clusters and Global Economy. Value chain linkage Arm’s-length market relationships: describes a relationship where there are potentially many buyers and sellers for equivalent products, even though particular buyers and sellers may engage in repeat transactions. This implies that the producer either makes a standard product or designs the product without reference to the needs of any particular customer. The customer is a “design taker.” It also implies that there is no transaction-specific investment required by either party to the transaction. Network relationships: occur when the supplier and buyer combine complementary competences. They may jointly design the “product” using their different competences, and transaction-specific investment will be made. This type of relationship is particularly evident when both buyer and supplier are innovators, close to the technology or market frontiers, but it also arises when firms focus on their core competencies and outsource important activities to suppliers. Quasi-hierarchical relationships: occur when one party to the transaction (usually the buyer) exercises a high degree of control over the other. This often includes specifying the design (or the general specification) of what is to be produced and also process parameters such as quality systems, materials, etc. The introduction of monitoring and control procedures and the transmission of product design features requires transaction specific investment. Hierarchical relationships: occur, firstly, when the buyer takes ownership of the producers in the cluster or establishes its own companies within the cluster, or when firms in the cluster integrate forwards, establishing production or distribution facilities in other countries. Source: Adapted from Humphrey and Schmitz (2000).

that this is an important area for policy intervention to boost trading skills and capacity at the local and national level. Hence, the issue arises of who controls the value chain, and what types of opportunities this offers for SMEs and their scope for upgrading and moving into higher value added activities. A particularly useful approach for analysing the relationship between different forms of buying relationships and the scope for cluster upgrading has been developed as a result of a multicountry study that analysed local and global governance issues (see website http://www.ids.ac.uk/ids/global/colepub.html). Four different types of linkages between SME clusters and global buyers have been identified, as summarized in Tables 1 and 2. Using the typology in Table 1, most developing countries clusters are based in quasi-hierarchical relationships. Although such relationships are costly, require asset specific investments in relationships with particular suppliers and also increase the rigidity of supply chains by raising the costs of switching suppliers, this type of structure nevertheless provides the global buyer with control over specification of product design. Many buyers are concerned to control this

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Table 2. Source of Wood and Wood Type, Used by Central Java Wood Furniture Clusters. Source of Wood

Origin Teak

Mahogany

Others

Perhutani

Boyolali Blora Kendal Klaten Pemalang Rembang Sragen

Magelang Kediri, Jawa Timur Jawa Barat

Batang Cilacap Jepara TegaJ Wonosari, Yogva Jawa Timur

Traders

Boyolali Blora Jepara Kendal Klaten Pemalang Purwodadi Purworejo Rembang Salatiga Solo Sragen Subah, Batang Temanggung Wonosari, Yogya

Boyolali Gunung Kidul Jepara Pemalang Purwodadi Solo Sragen Tegal Wonogiri Jawa Timur Jawa Barat Y Ogyakarta

Private forest

Purworejo Sragen Yogyakarta

Klaten Sragen Yogyakarta

Source: Cluster Survey, CEMSED (2002).

element, as well as to avoid potential losses arising from a failure to meet commitments (for example, delivering the right product on time) or a failure to ensure that the product conforms to the necessary standards. Three main reasons why quasihierarchical relationships are a particular feature of the insertion of developing country firms into the contemporary global economy include: (1) product differentiation and innovation are becoming increasingly important sources of competitive advantage; (2) final product markets in developed countries are characterized by an increasing emphasis on safety, labor and environmental standards, which requires greater monitoring and supervision of production processes; and (3) in some sectors, there is a degree of task complexity and/or

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time pressure that requires co-ordination of tasks across firms (Humphrey, 2003). A potential contradiction arises between the prevalent quasi-hierarchical sourcing behavior and the goal to upgrade Indonesian wood furniture clusters. This will be discussed further in the final section on policy implications.

Upstream Linkages – Raw Materials Utilization Wood furniture is a resource-intensive industry, as noted earlier, drawing heavily on local wood resources in Indonesian forests. The clusters in Central Java purchase their wood from three main sources: Perhutani; traders and private forests. As seen in the table below, the role of traders is the key source of wood for the majority of firms in the clusters examined in this survey. It is important to note the nearlyexclusive use of the precious woods teak and mahogany. The Indonesian wood furniture industry emerged from its rich natural resource base in precious woods, and skilled artisans emerged from the need to work this wood. An interesting developmental implication arises in this regard. What is the future developmental perspective if an industry that is intimately tied to its natural resource base, when that source of natural resources is under threat and being depleted at a rapid rate? As seen from the experience of the East Asian NICs (Newly Industrialized Countries), significant rates of local development and export performance, as well as skilling of the domestic labor force, are not necessarily tied to/dependent upon local resources. Such industries emerged and grew under strong dirigiste government policies, with complementary import protection, substantial financial support and strategic licensing and transfer of foreign technology. It appears that such conditions would not apply to the Indonesian wood furniture sector, which leads us to question the sustainability of such a resource-intensive industry where its resource base is under threat. On the one hand, high local-content industries such as wood furniture production survived better than other firms during the Asian Crisis (CEMSED, 2000, p. 4). On the other hand, mounting evidence shows that Indonesian forests are being harvested at unsustainable rates (Environmental Investigation Agency, 2003). Given that these firms rely upon using precious woods such as teak and mahogany, the option of importing wood would not offer a realistic solution to this forthcoming resource crisis, either in terms of cost or access. One strategic policy response to this situation might be to concentrate upon developing niche markets for high-quality wood furniture. This would not obviate the continued sourcing to both the domestic and export markets, but would require

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a greater diversification of market supply. Such a strategy would involve some clear policy interventions, including:
training of labor force in more sophisticated skills;
design training – perhaps developing a design school in the region;
technical support for marketing and access to these new markets;
business development services (BDS) assistance in managing technological change, free trade conditions, government regulations and entrepreneurship;
financial assistance, for new investments in production equipment, to conform to more stringent quality standards and delivery requirements;
consultancy services (in commercial law, language training, marketing information and in production technology such as kiln dry, machinery, design, etc. (CEMSED, 2002). In terms of relevant interventions at the firm and cluster level, initial project research has highlighted the very high rate of waste and inefficient use of wood in the manufacturing process. A series of potential interventions could be developed in order to assist these firms in improving their work methods, streamlining the production line and introducing more efficient resource management, which would contribute not only to increased productivity and reduced costs, but also toward greater occupational safety and health in the workplace.

Addressing the High Rate of Informality among Firms and Hiring Practices As can be seen from Table 3, 83% of firms in these clusters operate in the informal economy. Furthermore, their hiring practices reflect this level of informality, as more than two-thirds of the labor force are not working under formal contractual relations. In the first case, the high rate of informality of these firms raises important implications for government policy toward the sector. One of the major implications being that, in order to continue avoiding taxation, these firms remain unregistered and cannot avail of existing support and services, as well as acting as a severe constraint on the ability of the firm to grow (Tendler, 2002). One thing that is interesting to note, is that serving the export market does not appear to be a significant factor in influencing firms to move into formality. The use of informal hiring practices suggests the use of labor under precarious forms of employment, and research data also confirms that working conditions are of poor quality. It is important to note that, up to now, the research findings have not indicated that many wood furniture buyers actively encourage the use of certified sustainably

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Table 3. Distribution of Number of Enterprises and Number of Workers in Furniture Clusters in Central Java, 2000. No

Region

Enterprise

Number of Workers

Informal

Formal

Rise Total

%

Informal

Formal

Total

%

Markets Served (D = Domestic, E = Export)

Klaten Grobogan Jepara Blora Boyolali Semarang Sukoharjo Kendal Semarang

1,312 1,312 956 235 235 215 69 10 52

44 74 70 173 16 20 33 80 19

1,356 1,386 1,026 408 251 235 102 90 71

16.57 16.94 12.54 4.99 3.07 2.87 1.25 110 0.87

3,406 3,406 10,216 427 628 315 235 30 166

300 482 1,352 941 305 775 579 1,015 340

3,706 3,888 11,568 1,368 933 1,090 814 1,045 506

9.56 10.03 29.84 3.53 2.41 2.81 2.10 2.70 1.31

D, E D, E D, E D, E D, E D, E D, E D, E D, E

10 11 12 13 14 15 16 17

Purworejo Salatiga Surakarta Sragen Tegal Banyumas Kebumen Wonogiri

25 12 NA 1,276 754 410 250 201

17 13 11 60 280 21 13 40

42 25 11 1,336 1,034 431 263 241

0.51 0.31 0.13 16.33 12.64 5.27 3.21 2.95

25 55 NA 3,584 2,854 579 693 476

328 54 93 526 2,163 180 29 291

353 109 93 4,110 5,017 759 722 767

0.91 0.28 0.24 10.60 12.94 1.96 1.86 1.98

D, E D, E D, E D D D D D

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1 2 3 4 5 6 7 8 9

Temanggung Batang Rembang Pernalang Cilacap Wonosobo Pati Dcrnak Purbalingga Banjamegara Pekalongan Karanggaanyar Brebes Tegal Pekalongan 32

164 128 78 22 118 97 50 31 20 27 27 25 10 21 NA 6,830

14 49 77 116 6 14 37 41 27 13 NA NA 12 NA 7 11,353

178 177 155 138 124 111 87 72 47 40 27 25 22 21 7 8,183

%

91.43

83.47

16.53

100.00

2.18 2.16 1.89 1.69 1.52 1.36 1.06 0.88 0.57 0.49 0.33 0.31 0.27 0.26 0.09 100.00

320 549 122 44 335 287 135 47 106 54 108 51 40 139 26,026

89 460 843 582 66 81 417 251 208 120 NA NA 137 NA 36 12,743

409 1,009 965 626 401 368 552 298 34 174 108 51 177 139 36 38,769

67.13

32.87

100.00

1.05 2.60 2.49 1.61 1.03 0.95 1.42 0.77 0.81 0.45 0.28 0.3 0.46 0.36 0.09 100.00

D D D D D D D D D D D D D D D, E

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18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Central Java

Source: CEMSED (2002).

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harvested timber in their products. Similarly, participation in global markets does not seem to serve as an impetus for formalization of firms and their hiring practices. However, this does not mean that a more consistent policy in this regard would not be effective. Rather, a more proactive government policy directed toward stronger supply chain management may encourage upgrading of these wood furniture producers. As seen in countries such as Ireland, Malaysia, Mexico, the Philippines, South Africa and Singapore, strengthened linkages between SMEs and their global buyers can be a powerful impetus for modernizing and dynamizing local industries (UNCTAD, 2002). These countries upgraded their local productive capacities and enhanced their industrial performance by integrated into global supply chains (UNIDO, 2002). However, it should be emphasized that such changes are not automatic. There is a clear need for strong government policy in this regard and the need to form partnerships among all key stakeholders including government, global firms, SMEs and their support agencies (UNCTAD, 2002).

CONCLUSIONS We return to our original question about whether globalized markets can offer opportunities for SME clusters in developing countries to upgrade beyond competing mainly on unit costs. A more integrated view of systemic competitiveness requires not only manufacturing capability but also wise management of upstream linkages. In the case of resource-based industries, the good management of natural resources, coupled with a strategic deepening of specialized skills (including design, branding and marketing) and entrepreneurial talents, will be necessary pre-requisites to upgrade and improve competitiveness in global markets and to work with global buyers. The prudent stewardship of the upstream natural resource base is a task not only of the individual firm, but which must be tackled at a sectoral level and reinforced throughout the supply chain – in other words, at one level, sectoral associations, workers organizations, NGOs and government have a role to play, and at the other level, the downstream players, both global buyers and consumers, can have an impact by demanding products made from certified wood sources and sustainably-managed forests. Opportunities for upgrading of wood furniture SMEs are strongly influenced by two main factors. First of all, process and product innovation are core areas for industrial upgrading and are where firms and sectors must concentrate their attention, but they may no longer be sufficient factors to compete in buyerdriven product lines. Manufacturers must also have an eye toward areas such as brand naming, improving their marketing expertise and keeping track of new

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design trends. Second, the resources required for this type of functional upgrading will likely be prohibitive for local firms to shoulder unaided. There is a role here for proactive SME support policies as well as credit and interventions that would help to alleviate the costs and risks of upgrading. The discussion in this paper has also pointed toward important issues raised in recent research findings indicating that different types of global buyer networks allow for, or limit, different upgrading opportunities. As seen in this paper, quasi-hierarchical buyer relationships have been found to provide limited opportunities for suppliers to develop design capabilities. Hence, clusters of wood furniture producers may need to consider more specialized buyers and specialized market niches that will allow for more collaboration in the development of design-intensive furniture models. The fundamental recommendation that arises from this analysis is that Indonesian wood furniture clusters would do well to engage in a strategic evaluation of current markets they serve and new potential market opportunities. The outcome of such an evaluation may lead firms to consider news ways to both target more designintensive markets, as well as develop an overall more diversified range of markets being served. It must be borne in mind, however, that if this is the path chosen, then substantial efforts and resources would need to be directed toward training and strategic orientation toward intensifying local design and marketing capabilities. One way to approach the diversification of markets would be to undertake an evaluation of different market opportunities and the challenges posed by each of these opportunities. A brief exercise of evaluating four market possibilities, and the respective opportunities and challenges of each, is summarized in a simple matrix in Table 4. What implications does this discussion raise for labor and employment levels? First of all, such an upgrading strategy would aim to forestall current and potential future job losses resulting from reduced furniture exports. Instead, the upgrading strategy would seek to stabilize employment at current levels, by involving enterprises, workers and government to work together to address this complex range of competitive pressures that are bearing on this industry. This type of multi-stakeholder forum, complemented with targeted studies such as market assessments, could recommend specific policy interventions such as new types of training programs to produce a significant increase, and greater diversification, in the skill base of workers in this sector. A second type of strategic intervention could involve moving into more design-intensive products, which would change the range of market opportunities by shifting into higher value added product ranges. In turn, one could expect that higher profit margins per unit of furniture produced would reinforce careful use of scarce natural timber resources, and also raise the importance of worker skills, suggesting that such an approach may enable workers to retain their current employment if they become involved in more training, as well

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Table 4. Possible Evaluation of Opportunities and Challenges of Four Core Markets for Wood Furniture Suppliers. Market

Opportunities

Challenges

Global multi-store retailers

Process upgrading

“Lock in,” lack of functional upgrading opportunities Risk of becoming low-labor cost producer Wood supplies

Speciality buyers

Good functional upgrading opportunities Better value-added per unit produced More skilled labor Opportunities to develop design skills in-house

Limited scale, problems of identifying and entering in contact with these buyers

Domestic buyers

Escapes risk of fluctuations on international market and control of profit margins, scale and buying conditions by global buyers

Possibly less demanding market Limited scale

Importing agents

Provides access to international markets of greater sophistication, higher unit value

Reduced profit margins

as open the possibility for young people to be a main catalyst for this upgrading and introduction of new skills. Greater demand for a more skilled and stable labor force may result, a possibly contributing positive efforts to improve conditions of work and hiring practices. As a longer-term strategy, an upgrading trajectory could serve as part of a process toward providing more stable contracts for workers, opening the door for formalization of a greater segment of the labor force, and possibly 1eading toward registration of firms that currently operate in the informal economy. Finally, this text has raised the importance of also involving global buyers in the process of upgrading their supplier base, in line with current efforts toward corporate social responsibility, by providing encouragement for greater compliance with labor and environmental standards in a way that provides a carrot for upgrading, rather than threatening firms with lost markets if they do not comply with these new standards.

NOTES 1. Project on “High Road upgrading opportunities in the Indonesian wood furniture sector,” coordinated by IFP/SEED, International Labor Office.

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2. For example, small enterprises play a critical social and economic role in all parts of Indonesia. Over 60% of the Indonesian workforce is employed by SMEs (Indonesian Central Bureau of Statistics, 1996). Because of this, SME performance over the next several years will bear heavily on the speed and trajectory of Indonesia’s recovery from the Asian crisis and, most important, how quickly an economic revival will translate into improved day-to-day circumstances for ordinary Indonesians. 3. It is likely that government statistics underestimate the value of Jepara exports, as many businesses under report the value of exports to reduce their tax burden. Furthermore, government statistics also omit indirect exports which exclude substantial amounts of furniture partly processed in Jepara and completed elsewhere, which could add as much as 75% to the official export total. Similarly, government figures underestimate the furniture industry’s labor force, as data is not collected from unregistered companies or for workers hired on a piecework basis. As seen in the Clusters Survey conducted recently as part of the ILO project, the majority of firms were found to be unregistered and the majority of workers were informal. 4. These policy measures to protect timber for local producers provided a crucial boost to the furniture industry, especially considering that timber has made up close to half of Jepara production costs (Schiller & Martin-Schiller, 1997, p. 9). Teak has been the preferred wood, and by the early 1980s, Indonesia was the only furniture producer with plentiful domestic supplies of mahogany (ibid.). 5. In addition to a partial break-down in the infrastructure improvements described earlier during the 1980s, including a deterioration of Semarang harbor, as well as poor road connections linking Jepara to the harbor (Sandee et al., 2002). 6. Previous studies have used Jepara as their case study for the Indonesian furniture industry. However, this Cluster Survey sponsored by the ILO (CEMSED, 2002) included three issues in the analysis, which had been absent in previous studies, namely: (a) the dynamic linkages between clusters in an of Central Java; (b) value chain analysis, how clusters and the industry in general is part of an entire value chain; and (c) much greater and comprehensive analysis of employment and conditions of work issues that in previous studies. Thus, the objective of this new research was to profile a sample of wood furniture clusters in Central Java, draw and analyse a dynamic picture of relations between and inside clusters, in order to analyse the driving and restraining forces that contribute to the development of the Indonesian wood furniture industry.

REFERENCES CEMSED (2002). Value chain analysis of furniture clusters in central Java. Report on a survey prepared for the ILO, Salatiga. Gereffi, G. (1999). International trade and industrial upgrading in the apparel commodity chain. Journal of International Economics (48), Durham. Gereffi, G., & Kaplinsky, R. (Eds) (2001, July). The value of value chains: Spreading the gains from globalization. IDS Bulletin, Institute of Development Studies, 32(3). Gereffi, G., & Korzeniewicz, M. (Eds) (1994). Commodity chains and global capitalism. Westport: Praeger Press. Humphrey, J. (2003). Opportunities for SMEs in developing countries to upgrade in a global economy. IFP/SEED Working Paper 43, ILO, Geneva.

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Humphrey, J., & Schmitz, H. (2001, July). Governance in global value chains. IDS Bulletin, Institute of Development Studies, 32(3). Indonesian Central Bureau of Statistics (1996). Kaplinsky, R., Morris, M., & Readman, J. (2002). The globalization of product markets and immiserising Growth: Lessons from the South African Furniture Industry. World Development. Nadvi, K., & Schmitz, H. (1994). Industrial clusters in less developed countries: review of experiences and research agenda, Discussion Paper No. 339, Institute of Development Studies, University of Sussex, Brighton. Readman, J. (2002). Global value chains of wood products and wood furniture industries. Report prepared for ILO. Reinecke, G. (2002). Small enterprises, big challenges: A literature review on the impact of the policy environment on the creation and improvement of jobs within small enterprises. ILO IFP/SEED Working Paper 23, Geneva. Sandee, R., Sulandjari, S., & Rupidara, N. (2002, December). Business networks and value chains in furniture production: An analysis of demand-supply relationships of teak furniture from Central Java, Indonesia. First draft of a report to the ILO, Amsterdam. Schiller, J., & Martin-Schiller, B. (1997). Market, culture and state in the emergence of an Indonesian export furniture industry. Journal of Asian Business, 13(1). Sengenberger, W., & Pyke, F. (1992). Industrial districts and local economic regeneration. International Institute of Labor Studies, Geneva. Tendler, J. (2002, Summer). Small firms, the informal sector, and the devil’s deal. IDS Bulletin, Institute of Development Studies. Sussex. Tissari, J. (2002, 9–l2 July). Potential and status of further processing of tropical timber in the ASIAPacific region. Presented to the Workshop on Further Processing of Tropical Timber in the AsiaPacific Region, Korea Forest Research Institute. UNCTAD (2002, 20 December). Improving the competitiveness of SMEs through enhancing productive capacity. Report by the UNCT AD Secretariat, Geneva. UNIDO (2002). Industrial Development Report 2002/2003. Vienna. World Development (1999, September). In: H. Schmitz & K. Nadvi (Eds), Special Issue on Industrial Clusters in Developing Countries (Vol. 27, No. 9).

CONCLUSION

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WORK RESTRUCTURING AS ONGOING GLOCAL PROCESSES: CONCLUDING REMARKS Leni Beukema ABSTRACT In this concluding chapter the empirical research on work restructuring that is presented in the different chapters is related to the central question of this volume: in which way is the global produced and reproduced in the local and what does this mean for the (re)structuring of the local? The central themes of the introductory chapter of this volume are taken into account: the increasing impact of the cultural on the economical sphere, the strategic effect of various organizational options, the coming into being of new sectors, labor relations in a globalizing world and the tension between clusterization and relocation of labor. In the last part of this contribution some remarks are made on a possible direction of further research in the field of work restructuring in its glocal context.

INTRODUCTION In this volume a rich variety of research has been presented concerning the interference of the global and the local in work restructuring. The contributions not only highlighted different parts of the world, but also showed many possibilities to study the subject in both methodological as in substantive respect. Globalism/Localism at Work Research in the Sociology of Work, Volume 13, 197–206 Copyright © 2004 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 0277-2833/doi:10.1016/S0277-2833(04)13011-2

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Restructuring of work has appeared in many different forms. It shows itself in the restructuring of the division of work between organizations: most companies nowadays work in networks that are all (in one way or another) influenced by actors and activities from other parts of the world. Restructuring also refers to the level of the organization of work within organizations: the interference between the global and the local is both a cause of restructuring the organization of work within the company but can also be traced in the underlying principles with which this restructuring it formed. Furthermore, the great impact of global processes on local practices of work restructuring always implies restructuring of labor relations: both collective and individual actors that are involved in the process change their attitude towards one another due to changing power relations. Finally, work restructuring in a globalizing world relates to a restructuring of social, political and economical relations within nation states or regions. In this concluding chapter I will relate the empirical research on work restructuring that is presented in the different chapters to the central question of this volume: in which way is the global produced and reproduced in the local and what does this mean for the (re)structuring of the local? In doing so I will take into account the central themes Carrillo and I distinguished in the introductory chapter of this volume: the increasing impact of the cultural on the economical sphere, the strategic effect of various organizational options, the coming into being of new sectors, labor relations in a globalizing world and the tension between clusterization and relocation of labor. In the last part of this contribution I will make some remarks on a possible direction of further research in the field of work restructuring in its glocal context.

RESTRUCTURING OF THE RELATIONS BETWEEN ORGANIZATIONS: THE INCREASING IMPORTANCE OF NETWORKING One thing has become strikingly clear when reading the different chapters: in a globalizing world no local company can survive as a closed system. The network society is not a concept social scientists invented out of the blue, but a reality that cannot be overlooked anymore. In many contributions in this volume the researchers focus on one form or another of network organizing. Specific forms that have been put forward are the “modular consortium” in Resende/Brazil, the regional clusters in Mexico and “chains” in Indonesia (commodity chains) and The Netherlands (logistic chains). When looking closer at these different forms we find some interesting points: The start of the process seems to be crucial for the global impact on the local practices. The coming of new, foreign industrial activities, as it happens

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in the Mexican and Brazilian cases means an enormous increase of industrial employment in the region. This does not always bring routine work but can also imply more highly skilled jobs. Wages are –in terms of the wages in more developed regions- low but relatively high for the region which means an (also relative) increase of prosperity. This relative prosperity can be called relative for more than one reason. The first reason refers to direct power relations involved: in the Mexican case division of power is nearly totally one-sided in favour of foreign investors; in the Brazilian case suppliers seem to have more influence but still have to fulfil the demands of the outsourcer. The second reason of the relativity of the gains for local actors lies in the insecurity of the presence of the outsourcer in the long term: the Mexican case shows the fear of losing jobs to even more low-cost countries like China. Here relocation of labor becomes visible. When on the contrary the process starts form existing local activities, as we can see in the Indonesian case, the local traditions and routines have more base to put its own mark on the process of globalization. In this case power relations are of course also at stake and global buyers seem to be far more able to put their influence to their own benefit. But still chances and opportunities can be formulated on behalf of the local enterprises involved. This is even more so in a Western country as The Netherlands, where the level of development facilitates the effort of dominating the world market. Strategic effects of various organizational options, as we mentioned in the introduction of this volume could not only be translated to the policies of large, multi- or transnational companies. It is also an important matter to discuss for companies on the local level or for a local network of small enterprises. The chances and opportunities mentioned here bring me to the second interesting point: the different ways in which skills are analysed. The Mexican case shows clearly that foreign investment doesn’t necessarily mean diminishing skill-levels between manual workers on the one hand and technicians’ engineers on the other. We also see here the relative growth of employees when compared to workers in the computer assembly and repair (Partida, Table VI). However, as Hualde states, existing segmentation needs to be overcome, not only because of the increasing opportunities of the work force but also because of the demands for quality of the companies themselves. Maybe this also can be an answer to the threat of relocation of labor to low wages areas: when quality becomes more important in the competitive struggle, higher skilled labor could be a prerequisite. The same can be said of the developments in Resende, where more formal education was stimulated by the arrival of the modular consortium of VW. Here, the effect of this upgrading was also analysed in political terms: unions could communicate more effectively with the workers because written communication became possible. Most directly related to inter-organizational developments are the skills mentioned in the Indonesian case: to strengthen the local position on the global commodity chain new competences are required, such as marketing capabilities and advanced

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design capabilities. Marketing and design also are at stake in the Dutch case where producers and buyers constantly combine their different skills to meet the relocated demands of the global market. In these cases the increasing impact of the cultural on the economical processes becomes quite concrete.

RESTRUCTURING OF PRODUCTION CONCEPTS: HOW OLD IS NEW? Some of the contributions to this volume pay attention to the restructuring of the work organization within the company, where changes in division of labor are studied in relation to forms of control of workers by management (especially Durand, Austrin & West). In the French case this type of restructuring is placed in the context of the network of the firm, where the mutual dependency of companies involved is taken into account. The necessity of increasing productivity due to this mutual dependency is recognized as the key motor of restructuring the internal work organization. The company is analysed here as an open system, with even combining principles of organization from different parts of the world. This “globalization of production concepts” is done not only out of economic objectives but also to make the changes locally acceptable for the workers. This of course is a well-known theme in sociology of work, but here global influence on the sense making and shaping of power relations on local level becomes very clear. Competences come in this case forward in a more political way than in the Indonesian and Dutch cases mentioned above, but also than in the cases of Mexico and Brazil: here it is analysed as a new focus of management on controling workers. Not the skills as such are important but they have to be accompanied by “good behavior” towards superiors and colleagues. What is interesting on the organizational level is to see the difference in work restructuring in an industrial sector and in a service sector as gambling. Whereas in the car industry organization of work leads to higher skilled tasks, in the gambling sector where mass consumption is coming up, dealers in modern casinos are being supplemented by machines (including machines that can establish networked roulette games). Face to face contact between customer and croupier, where the game itself is the central issue, diminishes considerable. As shown in other research in the service sector, “work becomes the job of hosting self-servicing customers rather than engaging in activity with them” (Austrin & West, this volume). This means that professional skills of dealers are replaced by more general competences in which the attitude towards customers becomes central. In other words, the cultural impact of labor becomes more tightly part of the economical aspect of it. But in contrast with this tendency seems the fact that control is focused purely on

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the economic output of the gambling and on the risks of deceit that come with the game than on the cultural processes involved with it: direct and real-time control of customers and croupiers is being replaced by electronic forms of control including electronic auditing of software.

LABOR RELATIONS IN A GLOBALIZING WORLD As could be expected in the field of sociology of work, a great many contributions pay attention to the question of labor relations in work restructuring. Here the question of the meaning of the interference of global and local is very much at stake: how do workers and unions react when companies try to increase their power with globalization as a strong argument to do so? In nearly all contributions unions are described as taking a defensive position; they have to seek answers to decentralization tendencies, to coping with world companies with their own managerial culture, to a workforce that has become more heterogeneous than ever. Although power balances between global operating firms and local based unions remain one-sided, more than one author points out the positive challenges for collective actors in the field of work. The asymmetric relationship between workers and their representatives on the one hand and strategic management of corporations on the other seem to be not determined to become more and more asymmetric because of the process of internationalization of (the field of) corporations. When on a local level this process is taken into account, it can sometimes also give opportunities and chances. This concerns the attention paid to precarious work and subcontracted workers as part of the productive chain (in Brazil and Mexico), but also the broadening of union activities to a municipal level as in Resende. Here the unions are actively involved in formulating answers to the network organizations in the region, which implies a broadening of union topics from the field of work to the field of quality of life. Along with these changes in union policies towards management of firms we can descry changes in unions internal cultures: from a purely antagonistic and militant attitude towards a more pragmatic analyses of possibilities of negotiations. For union leaders these changes in attitude require different competences as flexibility, communication towards actors in different positions etc. Various contributions (especially from Middle and South America) describe adequately the difficulties this breaking through routines brings about.

GLOCAL WORK AND NATIONAL STATES What we have seen in this volume is the increasing interference of the global and the local in work restructuring. In many contributions this process is limited to

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the role of actors in the economic and cultural sphere. In some contributions the political sphere is essential to understand the processes within and between firms. This counts especially for the gambling industry all over the world and for the telecommunication case from Brazil. Both cases present different directions of government policy: in telecommunications the driving force is withdrawal of the nation state from the economic sphere. On the contrary in the gambling industry local or national governments are active in regulating gambling in order to expand the night-time economy. In both cases global and local forces interact more closely with one another. But the different role of the state turns out to be of great importance for the balance between global and local. In the case of privatization international operating companies become main actors in the field, local actors have to adopt to these international forces. In the gambling case the local turns out to be more critical than purely the global influences. Here, as in the analyses of inter-firm relations, the starting point is crucial for the kind of interference of the global and the local. It seems decisive whether local actors are able to take an active attitude towards global players and how they use the scope they have. When only economic parameters are taken as starting point for national policy (as is mostly the case in processes of privatization) a defensive attitude shall be the result. It is not surprisingly that in a service sector as gambling, where not only economical but also cultural factors are central issues, national states take a more active position and put local values at front. This highlights again the importance of the strategic choice of organizational options: how can the local level be as influential as possible in order to reduce asymmetric power balances and to integrate economical, political and cultural spheres. It could be stated that the awareness of the existence of these options itself could strengthen the local players.

REFLEXIVE GLOCAL RESEARCH AND EMPOWERMENT OF WORKERS In the above we have seen how the various contributors in this volume analyse chances and opportunities for local actors to incorporate global influences in their local practices. In this sense this volume turns out to be a start in developing international research that contributes to more insight in the way workers are able to get more grip on their (g)local situation, in short to the empowerment of workers. At the end of this volume I would like to give some substantive and methodological considerations about the expansion of this kind of glocal research. In this way I hope to contribute to a programmatic line of international oriented research that

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breaks new ground for and contributes to a social science that takes the interference of the global and local as a base for analysing the chances of actively reducing imbalances of power in the field of work. First of all I want to make a plea for more attention to the level of the individual. For individual workers a restructuring of the meaning of work is at stake: not only the work they are performing itself, but also the place of their jobs in their private lives becomes a central question with the increasing flexibility and precariousness of work. If empowerment has one base, it is the base of the individual actors involved themselves: what is their strength, how do they formulate chances and problems, how do they make sense of their working life? But the individual level implies in my opinion not only the workers. On local level many actors should be involved to formulate strategies, options and chances in holding grip on the own situation. The possibility of such strategies shows the Resende case, where entrepeneurs, politicians, administrators and workers discuss strategies and organize lobbies in favour of the development of the region. The necessity of regional networks, in which economic players interact with other regional key figures (for instance on the field of housing, care, safety etc.) to strengthen the local towards global players is clear and should also be under investigation by social scientists whose main focus is on work. Social dialogue on local level is not only found in Resende but in far more places, each with their own conditions. In other contexts other formulas will be found and it is important to search these exemplars and analyse in what way they can be modified and useful in other contexts. In line with this first remark lies the task to find a new balance in individual and collective activities of workers. We see an increasing heterogeneity of the workforce nearly everywhere. This implies that the question of the possibilities of collective action of workers should be put high on the agenda: what are common goals, what are adequate coalitions for what group of workers, how to define the individual responsibility in actively shaping ones own work and how to think about more equivalence between workers and management, but also amongst workers themselves? Only a few contributions in this volume are on non-unionized sectors (Indonesia, gambling). It is very interesting to see how local actors are defined in these contributions. In the case of gambling regulation is taken care of by local governments, which strengthens the local level. The internal organization of casino’s on the other hand are becoming more and more uniform all over the world. This indicates that workers in the casinos or their representatives don’t play a decisive role in the organizational field. The Indonesian case focus on SME producers, who are challenged to upgrade their local position on global commodity chains. At the same time, these players need to be supported by either

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local government or by global buyer networks that allow for this type of upgrading. Here again the field of the internal organization, including the workers involved, is not explicitly mentioned as an active force in strengthening the local. The cause of this can be twofold. Either their role in shaping the local is very small, or network analysis by social scientists has not been able to integrate the different levels of analysis. The different contributions to this volume (by which I mean practically all contributions) indicate that the last option seems to be the most likely one. This integration of the analysis of intra- en inter-organizational developments is a very important theme in the study of work in social science and needs to be taken into account when starting international comparative research as mentioned above. A last substantive point that comes from the above concerns the way of analysing the kind of networks itself. Traditionally “sociology of work” has focused strongly on the study of industrial processes. From there the step towards industrial networks/clusters/districts is a logical one in a world where outsourcing is not restricted to the local level but takes a world-wide form. When combining this focus with the analyses of commodity chains a more complete picture of reality of networks becomes possible: in these chains not only processes of production take their place, but also those of distribution, financing, marketing etc. Inter-firm relations, their meanings, their power structures etc. and their consequences for choices that have to be made on the organizational level can be analysed in a more comprehensive way. Moreover, ecological aspects of processes of globalization can be more clearly related to the field of work in the chain analysis (as both the Indonesian and Dutch case show), a very important step in the topical interest of the social study of work. But also the defining of these chains themselves is under discussion. The distinction of Gereffi of producer-driven or buyer-driven commodity chains needs to be extended to the distribution sector as well, as we indicated in the Dutch contribution. Moreover, the logistic organization of the chain (including information and communication technology that goes along with that) needs attention to be able to connect processes within and between firms. When services gain in economic weight, social study of work needs to adapt to that. It is not all production that strikes the clock, other players on the chain are equally and sometimes more important when it comes to shaping the global and the local. Questions as where power is concentrated, how chain management is situated and shifts between players, how local meanings and local actors depend upon and at the same time actively shape meaning of actors at the other side of the world etc. have become of major importance. In our time, where cultural products and processes spread all over the world and are delocated and relocated many times by which the local complexity is increasing extensively, these aspects of the world of work need to be taken into

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account. If not, important opportunities of understanding sense making of local actors, of changing power relations and of strengthening local practices could be overlooked. Some methodological consequences of the above have already been mentioned in the introduction of this volume: including power relations, interpretations, meaning and subjectivity as constituting elements of social behavior on location. Moreover, we have stressed the necessity of acknowledgement of the contextbound character of generation of knowledge. Here I want to take a step further and put the question of possibilities and limitations of international comparative studies of work restructuring that have empowerment of the actors involved as an explicit goal. A first issue to consider is the different levels on which the research focuses, like: the composition and background of the research subjects, the routines, cultures, traditions and policies of the actors, organizations, countries and regions etc., and the interrelations between all these factors. Secondly, the differences and similarities in the content and meaning, the cohesion and interrelation of the global developments and the national/local/regional conditions, factors and developments have to be considered. For instance though family structures can play an important role, what these family structures stand for and the role they play in processes of globalization, is probably different for the contexts under study. Third, it will be clear that in the comparison at the international level, the complexity of converging or rather diverging conditions, factors and developments that are relevant for the research project, will reach its peak. Within the global world order, the nation state may be disappearing and the local may have context-transcending effects, but this doesn’t mean all differences will vanish. An approach in which contextualized case-studies are compared crossnationally and internationally on a macro-level, in principle forms a fruitful approach for reflexive research on work restructuring. With contextualized casestudies forming the basis for a research project, comparability can be approached in two ways. Firstly, the same case can be studied in more than one country (a variant of this option could be to take a (particular product/process in a) transnational region as a case). A second way to go about it is: by explicitly dealing with the national contexts on a macro-level. The question of how to get from case studies to the generalization of research-results in an international, comparative perspective, remains a difficult one to tackle, though. The aim should be to elaborate on what is specific in the case under study and then, from there on, try to distinguish features that might apply more generally. This requires a notion of generalization where the second may not go at the costs of the first. At the same time, we’ll have to accept that complexity and contextuality imply limits for generalization. Generalizations are possible but will never go

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beyond the elaboration of family-resemblances. Relying on quantification as a basis for generalization is no solution for this “problem” anyway, since quantified data say little or nothing about the reflexive actions of actors in their specific social context. Bluntly abstracting from this context only means that we’ll end up with a distorted picture of reality. What will help is an approach which takes as its starting point that the most important instrument for generalization is to explicitly elaborate on the broader social context that the case-study is part of. We should try to bring to the fore research strategies that are in line with these findings and examine in what way they can fruitfully be combined. I hope that with the contributions in this book we have made a start with this mission and put a basis for a productive approach suited to tackle the future challenges in the research field.